Visa recently launched the Digital Commerce Authentication Program (DCAP), which aims to help mitigate fraud and improve authorization rates through data sharing.
The most effective way to share the data is via the 3DS protocol, using Visa Data Only (VDO), which allows merchants to share data with Visa to give more context to issuers. VDO is the protocol; DCAP incentivizes merchants to use it.
Merchants can get a discount on their processing fees if they send enhanced data that helps issuers make more informed decisions. Visa data shows that enhanced data increases authorization rates by 2.8%: an even bigger benefit than the discount.
How Visa’s DCAP works and what data it requires
Bank declines don’t typically happen because of insufficient funds or technical issues. It’s far more likely that the bank — obligated to protect cardholders, first and foremost — lacks sufficient data and context to trust a transaction. With limited visibility into card-not-present (CNP) transactions, banks default to stricter, more conservative rules that result in lower authorization rates.
VDO lets merchants share more data on low-risk transactions, giving issuers more context to make informed decisions and reduce false declines.
Over the past few years, Visa has been encouraging issuers to adopt VDO and leverage this data to improve authorization decisions. To drive merchant adoption, Visa introduced DCAP, incentivizing them to share additional data: device ID, IP address, email address, full billing address, and phone number. Merchants can use the 3DS protocol to pass this data to Visa, gaining eligibility to DCAP and the associated interchange discount.
DCAP currently covers credit card, but not debit card, transactions in the U.S. only. The program has no Mastercard equivalent. While VDO is similar to Mastercard’s Identity Check Insights (IDCI), Mastercard is not granting a comparable discount for participating.
The benefits of participating in DCAP
Visa is incentivizing DCAP participation. Merchants can save up to 5 basis points on eligible transactions, or up to 10 basis points if they also use Visa Network Tokens.
The discount applies to customer-initiated transactions without 3DS authentication. Merchant-initiated transactions, recurring payments, account funding transactions, and installments are excluded. Discounts depend on the PSP; merchants must work with them directly.
Lower processing fees is just one financial benefit.
Card-present transactions carry a reduced fraud risk and have higher authorization rates than their CNP counterparts. Because enriched data gives issuers more context to confidently make informed decisions about transactions, DCAP helps merchants close that gap and reduce false declines.
Lowering false declines increases authorization rates and improves the customer experience by reducing unnecessary friction.
Important considerations for DCAP participation
Participation isn’t as simple as opting in. There are some crucial distinctions:
- Data quality: Merchants must have their identity signals, authentication, and authorization all connected
- Routing the right transactions to DCAP: Merchants must distinguish between when to use the protocol to share data, when to authenticate the customer to reduce the risk of fraud and shift the chargeback liability to the bank, and when to skip 3DS and go straight to authorization
- Choosing the best path for each transaction: Merchants must route transactions dynamically to their optimal path: which PSP to use, debit rails vs. Visa network, Network token or PAN, and more
- Performance metrics: Merchants must monitor performance closely to ensure the authorization rate is maximized
Visa launched DCAP in April, but most merchants are not yet live. The program looks straightforward on the surface. Merchants provide identity signals and watch their authorization rates improve.
Merchants need a payment platform that allows quick adoption of new tools as the ecosystem rolls them out, so they can increase authorization rates while reducing the cost of fraud and processing. Gaps within the payments flow prevent this adoption for many merchants.
How Forter supports DCAP
Forter helps merchants utilize DCAP by sharing data through VDO.
For merchants leveraging Forter’s fraud solution, we know the identity behind every interaction and have the data Visa requires. Once the fraud decision is made, relevant legitimate transactions are sent via DCAP to VDO. Our dynamic decision determines when to use Standard 3DS, VDO, or direct to standard authorization flows.
After the data is shared, we return the result to the merchant. They then send it to their PSP as part of the authorization flow.
DCAP is one of many tools available to help merchants boost conversions. Check out Forter’s Payments Maturity Assessment to see what other optimizations your payment flow may need.
