Who's afraid of frauds? Well, everybody, you'd say and indeed, with fraudsters' imagination and malevolent skills turning so savvy, simply having a card or an online shop puts us at risk.

According to eMarketer research, merchant losses from online payment fraud amounted to $2.6 billion in 2004. While that is only 1.8% of total sales, the threat of online crime has consumers frightened - and some are taking their business elsewhere.

eCommerce providers boast about how strong their antifraud systems are. Avangate does it and I personally wrote a recent press release on how we developed the next level in fraud control and we offered a reliable fraud detection module while speeding up the online order management and encouraging purchases. I am pretty sure other eCommerce solution providers push-up their antifraud muscles. It's a big distress in the industry, whatever your online business: software or retail. Charge backs are about profit and sometimes they even make the difference between good business and failure. Let's not talk about card owners who may find their account empty...

There is, however, a common concern for shop owners that introducing additional security filters and steps in the order process influences sales in a negative way: they are simply dropping! Card owners seem to dislike additional safety procedures and see them as cumbersome. So, the question is eventually about risk management: how much are you willing to take and what’s the solution?

I am only going to talk about one: 3D Secure. Pretty common in Europe, less known in the Americas, it is the standard introduced by Visa and MasterCard to allow authentication of cardholders in online epayment transactions. It was adopted and is offered with the service name Verified by Visa, MasterCard SecureCode, and recently J/Secure (by JCB).

Most chargebacks come when a card owner denies having authorized a specific payment and appealing against this claim can be very difficult and certainly longsome. 3D Secure actually reduces possibility of stolen cards or card data being used in online transactions. The supplemental identification code provided by 3D Secure guarantees once more the validity of the purchaser. Of course merchants’ exposure to charge back is limited and there will be less chances for them to lose money.

Now, let’s come back to the dropping sales concern. Is it common-sense to put your bank account at risk just because you find it too boring to complete one more form? I believe not and I also believe that with a proper communication and a clear message any shopper would see how concerned the merchant is about his/her safety, will trust that particular shop more, will come back and definitely recommend it.

There are at least 5 benefits online shops get from using 3D Secure:

• Ease of integration into merchant legacy systems-only a software Plug-in and passing of data to VisaNet is required at the merchant/processor
• Minimal impact on merchant’s interaction with consumer
• Increased sales by enhancing consumer confidence in online purchasing
• Reduced risk of fraudulent transactions
• Decrease in disputed transactions