Planet Payment Inc.’s efforts to reduce U.S. merchants’ international charge-back and online card-acceptance costs through a deal to offer a 3-D Secure service from CardinalCommerce Corp. could hinge on consumer participation in the fraud-prevention service.

U.S. consumer involvement in such 3-D Secure services as Visa Inc.’s Verified by Visa and MasterCard Worldwide’s SecureCode has been low. But participation outside the U.S. is relatively high, Scott Goldthwaite, Planet Payment senior vice president for product management and marketing, tells PaymentsSource, citing discussions with merchant customers.

And that is why the New York-based provider of international and multicurrency payment-processing services initially plans to offer CardinalCommerce’s 3-D Secure service Cardinal Centinel to merchant customers that do a lot of overseas business, he says.

“3-D secure is one of those must haves in those environments,” he says, declining to divulge how many merchant customers Planet Payment has.

Planet Payment has integrated Cardinal Centinel with its iPAY multicurrency eCommerce gateway. Cardinal Centinel supports both Verified by Visa and MasterCard SecureCode, and both card brands have been able to muster merchant participation in the programs though reduced interchange rates and improved charge-back rights.

Through 3-D Secure, card issuers provide their customers who opt in with an authentication passcode while shopping online at a participating merchant’s site.

CardinalCommerce sought out Planet Payment as a partner for offering the service, Colt McCutcheon, Cardinal Commerce vice president of global sales, tells PaymentsSource. “We saw a good connection based on merchants we were running into that we had in common,” he says. “With the announcement, it may be bundled into [Planet Payments’] service, but [the merchants] will know its Cardinal Centinel’s product.”

Merchant demand also played a role in Planet Payment’s decision to support Cardinal Centinel, Goldthwaite adds. “If you’re going to be in this business selling internationally, you need to be in the 3D Secure business,” he says, citing fraud and authentication as being problematic issues in cross-border commerce.

Also, Cardinal Commerce “is perhaps the most well known and has the easiest interface to develop to, and it was just easy to work with them,” Goldthwaite says of Planet Payment’s decision to work with Cardinal.

Cardinal Centinel helps online and mobile merchants to reduce fraudulent charge-backs, manual reviews and interchange rates. Through the agreement with Cleveland-based Cardinal, Planet Payment merchants may opt in to the Centinel service, McCutcheon says.

“We have a couple big ones that will do individual press releases” when announcing their participation, Goldwaite says. “You will see a high uptake. It’s moving liability, so it’s just worth it to do.”

The extent to which Visa and MasterCard shift liability to issuers from merchants when merchants support 3-D Secure varies, “and the caveats keep getting larger,” Goldthwaite says. “I hate to say specifically what the benefits are because they vary from country to country,” he says.

Also, the consumer process for registering for 3-D secure services from Visa or MasterCard tends to be onerous, and participation growth has been slow as a result, notes Maria Arminio, president and CEO of Avenue B Consulting in Redondo Beach, Calif.

“Merchants want the security, but they don’t want to divert consumers’ attention from the shopping experience. So if it interferes with that process, it tends to be a less-than-compelling consumer proposition, she says. “So it does have to be easy as well as secure.”

Two researchers in the United Kingdom in 2010 also found the 3-D Secure card-security protocols weak compared with other available options, though Visa disputed some of the findings as "theoretical," (see story).

Later this year, Planet Payment plans to consider adding another service tied to Cardinal Sentinel that helps to secure alternative-payment methods that the traditional card brands don’t support, such as bank funds transfers and PIN-based transactions initiated online, Goldthwaite says.

This past spring, Planet Payment announced a deal with China UnionPay in an agreement that includes enhancing iPay by supporting the card brand’s new UnionPay Online Payment service, which will provide merchants with the facility to authenticate and process UnionPay PIN-debit debit cards online in a process similar to 3-D Secure, Goldwaite says. The target launch for the service is this quarter, according to a news release.

Planet Payment last month purchased Branded Payment Solutions, an Irish payments company. The acquisition will allow Planet Payment to provide applications at the point of sale, which it did not do previously (see story).

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