Card holder authentication helps merchants to prevent chargebacks associated to the fraudulent use of cards or where the cardholder denies using the card. In general, liability shift applies in case of a successful cardholder authentication or a successful attempt of authentication (when the cardholder or the issuing bank are not enrolled for authentication) and the results may differ depending on whether the card is a personal or a commercial one.
Liability shift via authentication programs
Online merchants can shift liability to the issuing bank by participating in customer authentication programs offered by Visa, MasterCard and American Express. The authentication programs mentioned above are known as “Verified by Visa”, “SecureCode” from MasterCard, and SafeKey from American Express. This security protocol to prevent fraud in online credit and debit card transactions involve the creation of a user ID and password for online card purchases. Authentication programs only protect from fraudulent transactions. The issuing bank can still chargeback for other reasons like damaged goods, not as described goods or non-delivery of goods.
Paymill advise using 3D Secure in conjunction with other fraud checks.