What Merchants Need To Know About Mastercard SecureCode?

The growing number of fraudulent activities requires an added layer of protection for your transactions. MasterCard SecureCode is just that. This ensures that even if someone gets access to your credit/debit card, they won’t be able to use it unless they enter the authentication code sent to the registered mobile number for verification. In this post, we’ve discussed all that a merchant and cardholders need to know about MasterCard and how they can use it to authenticate their transactions. Read on.

What is a MasterCard SecureCode?

MasterCard SecureCode is an authentication program designed for merchants and cardholders executing payments via MasterCard. A cardholder enters their card credentials on the merchant’s website to complete their transaction. Once they have submitted the card details, they will be asked to enter a one-time password sent by the issuing bank to their registered mobile numbers or email accounts.

This second layer of authentication might seem pretty time-consuming, but this validates the buyer’s identity and ensures that the cardholder is processing the transaction. The program is absolutely free for cardholders, making it the safest and best choice for all MasterCard holders.

Not just for the cardholders, but this program is quite beneficial for the merchants too. It reduces chargeback issuance and facilitates secured payments on the merchant’s website. This 3-D secure program is, however, optional and works only when both—the merchant and the cardholder—have subscribed to the service. To activate the program, you need to talk to the acquiring bank.

Here’s how it works.

Using MasterCard SecureCode at Checkout

MasterCard SecureCode program started in 2001. Since then, it has seen many upgrades. The issuers wanted to make the checkout secure and convenient at the same time. To ensure maximum protection for merchants and cardholders, MasterCard has made this SecureCode verification process applicable to only high-risk transactions, which are identified automatically. These transactions can also be executed once the cardholder enters the SecureCode on the pop-up window. Let’s see how this 3D Secure program works.

Step 1: A customer enters their credit/debit card details on the checkout page once they have finalized their purchase decision.

Step 2: The transaction, however, is not processed immediately. The customer is rather redirected to the pop-up window issued by the card issuer. Here, the buyer is supposed to enter the pre-selected secure code.

Step 3: The validity of the SecureCode is then checked and verified. Once the code is identified as valid, the information about the same is sent to the payment gateway.

Step 4: You will be redirected to the checkout page where your transaction is processed.

This may look like a hectic process, but everything is handled at the back end within seconds. You only need to enter the SecureCode when you are prompted, and the rest is managed by the MasterCard team. As mentioned before, the MasterCard SecureCode program has changed significantly since it was launched initially.

Earlier, it was applied to all transactions, irrespective of the size and value of the transaction. To make the process more efficient and convenient, merchants use different screening tools to identify risky transactions and prompt customers to type the SecureCode only if the transaction is deemed risky.

Note: The program is only for registered users, i.e. cardholders who have opted for the service. It may not work for those who have not subscribed to the program. You can sign up for the program at your card-issuing bank.

Benefits of MasterCard SecureCode for Merchants and Customers

MasterCard SecureCode is just like the PIN code you enter when withdrawing money and using your card at land-based stores. This additional form of authentication makes sense for merchants and customers alike. Below we’ve listed the benefits of this program for both.

For Merchants

• Protection from Fraudulent Transactions: A high number of fraudulent transactions on a merchant’s website can negatively affect their reputation. The SecureCode program reduces the risk of a fraudster gaining access to the card details and SecureCode simultaneously.
• Fewer Chargebacks: The merchant will notice fewer chargebacks on their statements if they implement SecureCode. That’s because chargebacks are often initiated when the consumer notices unrecognized transactions from their cards. They initiate a forced refund, which results in an unnecessary loss for the merchant.
• Good for the Merchant’s Image: Merchants implementing a SecureCode improve their reputation. Customers want to buy from websites that implement the best security programs so that their card details and sensitive information stays between the merchant and the customer. Customers will feel more confident buying from your store if you use this additional layer of protection to verify credit/debit card transactions.
• It’s Free: If you are concerned that SecureCode implementation will cost you a specific amount on each transaction, you can rest assured that it’s free. It doesn’t cost anything to the merchant or the customer. Once you have opted-in for the service, all MasterCard users (those who have signed up for this program) will be prompted to enter a SecureCode if their transaction is identified as risky.

For Consumers

Just like merchants, the MasterCard SecureCode program is beneficial for consumers too. Here’s why customers should opt in for this service.

• Protection from Frauds: MasterCard’s dual-layer protection plan prevents fraudulent transactions on the merchant’s website. Customers can rest easy knowing that if someone gains unauthorized access to their card details, they won’t be able to hack the SecureCode. This lowers the risk of fraudulent transactions through customer’s MasterCard
• Security Assurance: Due to the increasing cases of payment fraud, customers have become conscious of a merchant’s website security more now than ever. The SecureCode logo on the merchant’s website gives customers peace of mind. They know that the merchant has implemented a dual-layer protection program, which implies that they take customers’ security seriously.

Downsides to SecureCode

Merchants have been focusing on optimizing the checkout process to bring the checkout abandonment rate down. Customers tend to abandon carts because of the lengthy checkout process. Requesting too much and unnecessary information during checkout can result in an increased cart abandonment rate. Although SecureCode improves security, it can be one of the reasons why customers may add products to their cart but hit the back button before buying.

Likewise, customers may find the checkout pretty lengthy with this additional step. In addition, if customers have not signed up for SecureCode yet, they may need to enroll for a pre-selected code, which is another time-consuming and hectic procedure.

Is the SecureProgram Effective at Preventing Fraud?

Well, yes! The biggest advantage of MasterCard SecureProgram from a Merchant’s point of view would be shifting the liability to the card issuer. It’s hard to defeat this technology, but if that happens, the merchant won’t be held liable for the fraudulent transaction. This protects the merchant from cardholder unauthorized and not recognized transactions while resulting in relatively fewer chargebacks. This further helps the merchant pay less in processing expenses and chargeback losses.

MasterCard SecureCode doesn’t just prevent merchant liability, but it’s an ideal way to reduce the risk of fraudulent activities. Suppose you used your MasterCard debit card to pay for something at the brick-and-mortar store. Somebody saw and copied your card details. They use it to make an online transaction only to discover that they are prompted to enter the SecureCode. The transaction won’t be complete until they enter an accurate code.

Before you opt-in for the program, note that SecureCode isn’t perfect and may not protect you from all kinds of fraudulent activities. The 3D Secure technology was developed to prevent fraud, but it doesn’t offer protection from chargebacks. There are certain things you should know about the technology before implementing it.

• MasterCard SecureCode is a perfect solution to fraudulent activities that take place online. It can be applied to online transactions but doesn’t work for the land-based store.
• It doesn’t work if the merchant has not implemented it on their website or the customer has not opted for the SecureCode program. Both must sign up for the program.
• SecureCode works for only MasterCard transactions. The rest of the cardholders and merchants accepting payments from other sources will be exposed to the risk of fraud.
• There’s still a risk someone might defeat this added layer of protection. For instance, a child might use their parent’s phone and enter SecureCode to complete the transaction.

In a nutshell, MasterCard SecureCode is an effective layer of protection for all MasterCard holders. No matter the website you are buying from, with this program, you will have peace of mind knowing that your transactions are secure. Merchants are also relieved from chargebacks and unnecessary disputes due to unauthorized transactions.

Bottom Line

Credit and debit card fraud is costing customers millions annually. Not only at brick-and-mortar stores but fraud related to these cards has become a common issue at online stores too. People are highly likely to buy from online stores that prioritize customer protection. Implementing SecureCode can prevent the risk of unauthorized transactions through MasterCard, improving your reputation and increasing customers’ security.