If e-commerce had seven dirty words, chargeback (a demand by a credit-card provider for a retailer to make good the loss on a fraudulent or disputed transaction) would definitely be one of them. A chargeback is what happens when a credit card customer disputes a and your e-commerce store is forced to refund the transaction.

In cases of fraud, this means you could wind up repaying the amount of the disputed transaction—in addition to related shipping costs and chargeback fines—as well as losing your merchandise to the fraudster. It’s enough to make any merchant reconsider accepting credit cards in the first place. This is why Verified by Visa, and MasterCard SecureCode were created to prevent e-commerce chargebacks.

Chargeback Types
The two most commonly encountered chargebacks stem from instances of Fraudulent Transaction claims and Cardholder Does Not Recognize Transaction complaints. Very simple for consumers to initiate, a cardholder can easily open a claim online, and you will be required to defend the charge—or forfeit the revenue.

Secured Payment Authentication
Verified by Visa (VbV) and MasterCard SecureCode (3DS) require a customer to provide a personal identification number (PIN) in addition to the card number, expiration date, and security code when conducting a transaction.

Known as 3-D Secure systems, their PINs serve as the customer’s digital signature. It’s very difficult for perpetrators of fraud to conduct transactions using pilfered card numbers with this added layer of authentication in place. So much so, if a claim is filed against a 3-D Secure transaction, the card companies shift the burden of proof from the merchant to the bank that issued the card.

In an environment in which 51 percent of people with internet access choose to avoid engaging in online transactions due to privacy and security concerns, next to conducting a careful e-commerce solutions comparison before setting up your store, this can be one of the most important choices you can make for your store.

Protections Afforded
Merchants get the following protections when VbV and 3DS protocols are in place.

· Guaranteed payment of full authentications when a PIN is entered

· Guaranteed payment on attempted authentications when a cardholder is not enrolled on all domestic Visa transactions and all international MasterCard transactions

· Liability is shifted from a secure payment merchant to the cardholder’s issuing bank in instances of fraud

· Heavily reduced fraud-screening costs