Credit card chargeback occurs when a credit card transaction is reversed by the issuing bank at the cardholders request usually because the card was debited in error or fraudulently or goods have been found to be faulty or not delivered. The funds are withdrawn from the merchant's account and refunded to the cardholder.
Chargeback blocking is a means whereby the card issuing banks are prevented from withdrawing the funds from the merchant acquiring bank. Reducing chargebacks means a reduction in penalties to the merchant and allows the merchant to keep the deposited funds.
3-D Secure was developed initially by Visa to increase security by adding an authentication step for online debit and credit card transactions. Visa offers the system to customers as Verified by Visa. Mastercard soon followed suit and offers the same verification process under the name MasterCard SecureCode. Merchants employing the payer authentication software on their sites are protected against chargeback meaning that responsibility for refunds is left with the card issuing bank.
Chargeback blocking results in the transfer of transaction liability. With the merchant freed of responsibilty for reimbursing the client, the card issuing bank assumes liability, provided the merchant has payer authentication. That is, all banks issuing Visa or MasterCards are liable for all ecommerce transactions protected by payer authentication. This is the reason that major online merchants are using payer authentication software.
Any business accepting credit card payment for services or merchandise, irrespective of size, will benefit from using payer authentication software. In particular, high risk businesses such those offering adult services, software products, gaming etc will reduce losses from chargeback and fraud.
Merchants seeking protection against chargebacks can obtain 3-D Secure services from Advanced Payments. Payer authentication software is a cost-effective and effective way to protect your business.