Cardholder Authentication Programs

Cardholder authentication programs are essential security mechanisms designed to verify the identity of a customer during card transactions, particularly in card-not-present scenarios such as online purchases. The primary goal of these programs is to enhance transaction security, thereby protecting both merchants and consumers from fraud.

The most widely recognized cardholder authentication programs are Visa Secure and Mastercard Identity Check. Both are implementations of the 3-D Secure 2.0 protocol, which significantly improves the security of online transactions. These programs function by involving the issuing bank in the authentication process: when a transaction is initiated, the bank is requested to verify the legitimacy of the transaction. If the transaction appears suspicious or if the automated checks are insufficient, the bank may require further verification by asking the customer to provide a one-time password (OTP). This OTP is typically sent to the customer's registered phone number or email, which must be entered to complete the transaction.

This layered authentication approach ensures that the person attempting the transaction is indeed the rightful cardholder, reducing the likelihood of unauthorized use and enhancing overall transaction security. By implementing such authentication measures, merchants can reduce fraud-related losses and provide their customers with a safer shopping experience.