In an effort to encourage more participation in its SecureCode program, MasterCard is reducing its Interchange rates for online sales that are transacted with the program. Merchants can lower their transaction costs by as much as 59 basis points with SecureCode and by as much as 10 basis points with Verified by Visa which is Visa’s implementation of the same service.
MasterCard’s SecureCode and Visa’s Verified By Visa program shift liability to the issuing bank, away from merchants and their acquiring bank. Both products use an extra code or password, known only to the cardholder and issuing bank, that is entered after the other card information. This code is confirmed at the time of purchase. Because this code is known only to the cardholder it is assumed that the cardholder is making the purchase and reduces the likelihood of fraud dramatically.