What is "Verified by Visa"?

Quoting the Verified by Visa web site,

Verified by Visa protects your existing Visa card with a password you create, giving you assurance that only you can use your Visa card online.

Normally, when you shop online, your credit card number is accepted and your account is charged, without verification. Such a transaction is referred to as a “card not present” transaction, meaning that the merchant did not see the card, much less match your signature to the signature on the card. Under such circumstances, if your card—or even the information on your card—is stolen, a thief could use it to shop online.

One consequence of a “card not present” transaction is that the card issuer charges the merchant a higher fee to process the transaction, anticipating a certain amount of fraudulent transactions that will be disputed by cardholders. Liability for fraudulent transactions also shifts to the merchant. If you dispute a “card not present” transaction on your statement, then it is the merchant who is liable, not the issuer.

When you enroll in Verified by Visa, the issuer verifies your identity, and you establish a shared secret (a password) between with the issuer. Now when you shop online with certain merchants, they ask you verify your ownership of the card by supplying your password. The merchant checks the password with the issuer and allows the transaction only if it is correct.

In exchange for the additional verification, the issuer charges the merchant a lower fee, and also takes on the liability for fraudulent transactions. In exchange for investment in some additional online infrastructure, the merchant saves on transaction fees and promotes customer confidence in online transactions. In exchange for having to enroll and supply a password, you get some additional security against credit card theft.

Tags: Business

Created at: 6 October 2005 11:10 AM