Recently, Visa and MasterCard announced that they were killing off their respective fraud prevention services: Verified by Visa and MasterCard SecureCode.
Users and retailers across Europe were ecstatic. Based on the complaints on online forums, Twitter, and other sources online, it would have been hard to hate these inefficient fraud prevention services more.
The previous system was broken for both parties involved. For consumers, it added friction to the payment process, and a lot of it. If the system didn’t recognize your complicated pre-determined password, you would need to contact your card issuer to reset the password…which automatically locked you out after only three failed attempts. Judging from amount of complaints online, it seems like the Verified by Visa customer service line was ringing off the hook. So many hoops to jump through just to complete a simple transaction.
And for the merchants, Verified by Visa was not only causing the retailers to lose out on potential sales and revenue, but actually lose money because of the high chargeback fees. The system was penalizing both the customer, by making the payment process even more difficult, and the merchants, by having them deal with unhappy customers and still pay fees on transaction errors that weren’t the merchants' fault. Quite a rare double whammy.
The new system, called SecureNet, aims to fix that…but all indications say that it will fail miserably. For the consumers, SecureNet may be a bit better — authenticating a payment through biometrics is typically faster and more frictionless, but only if it's done right. Apple Pay has already solved this issue.
For merchants, SecureNet looks like it’ll be a bit better, but its just another classic misdirection from the card networks. While announcing SecureNet, Visa and MasterCard also announced that they’d be increasing the chargeback fees for its merchants in a separate, less reported, press release.
Real classy, guys!
A key question with antifraud is, "whose team are you on?" Here at Trustev, we are unequivocally on the side of merchants and want to help reduce fraud and chargebacks to zero (or as near as possible to zero). Card networks and banks seem to want to reduce fraud, but ultimately they're not paying for it: retailers are.