MasterCard Pushes SecureCode to Beat the Holiday Rush

MasterCard International expects to bring thousands of new Internet merchants into its SecureCode transaction security program by the middle of next month. The new merchant signings will result from a major push the card network is making for SecureCode among large, well-know online retailers as well as among Web hosting services that provide payment gateways. One such service, Digital River, is expected to bring “a few thousand” merchant clients live on SecureCode in coming weeks, according to Tom Maxwell, director of global e-business for MasterCard. Maxwell says MasterCard also plans to promote SecureCode, highlighting some merchants that have adopted the system, in various marketing efforts it makes during the upcoming Christmas gift-giving season. He says the goal is to make sure the new retailers have gone through implementation by the middle of October, the time when most retailers freeze all technical work related to payments so as not to interfere with pre-holiday sales. Currently, 2,800 online merchants in the U.S. have adopted SecureCode, a program by which consumers can authenticate transactions by entering a secret password on a screen during the checkout process. “We've seen a tremendous amount of growth if you look at where we were on Jan. 1,” says Maxwell, who estimates the merchant count for SecureCode has risen 20% to 30% in that time. He will not project a number for year's end. MasterCard's sales strategy, he says, has been to directly approach large, so-called “marquee” merchants, along with their acquiring banks, while also working with payment gateways and so-called platforms, or companies that provide hosting and gateway packages, in an effort to scoop up scores of merchants at a time. “[Platforms] could be doing SecureCode not for one merchant but for tens of thousands of merchants,” he says, with a single implementation of MasterCard's software. He says SecureCode has become more attractive to merchants as a result of industry standardization around so-called 3D Secure, an online authentication program developed by Visa, whose own version is called Verified by Visa. This standardization allows merchants to leverage investments in 3D Secure across two major payment platforms. Visa, for its part, has followed a similar marketing plan for VbyV (Digital Transactions News, July 29). Still, there are significant differences between the two card associations regarding pricing and liability for chargebacks stemming from fraud. While Visa has decided to shift chargeback liability to issuers for all merchants that enable VbyV, MasterCard's approach differs by region. In the region encompassing North America, Latin America, and the Caribbean, Maxwell says, all three parties to the transaction?cardholder, issuer, and merchant?must have adopted SecureCode before liability can shift to the issuer. In the rest of the world, MasterCard's policy mirrors Visa's. Also, unlike Visa, which discounts interchange on all VbyV transactions by 5 basis points, MasterCard offers a discount only on so-called cross-border payments, or those flowing from cardholders in one country to merchants in another. Maxwell refuses to say how much lower these transactions are. He argues that, while MasterCard's interchange policy is less sweeping than Visa's, the Visa “discount” really amounts to a surcharge the association levies against online merchants that have not adopted VbyV. To date, 2,700 MasterCard issuers wordwide have gone live with SecureCode, with all but 200 of these in North America. Forty-five acquirers in North America have installed the system, out of 180 globally. And 18,400 online retailers have enabled SecureCode, with 2,800 of them in North America. Recently, indeed, MasterCard announced that some 5,800 Web merchants in Europe were accepting Maestro transactions through SecureCode. Maestro, MasterCard's debit card secured by personal identification numbers, boasts 253.1 million cardholders in Europe, compared to 46.8 million in North America. “We're fairly happy with where we are at this point,” says Maxwell.