Verified by Visa is an additional security measure that can be inserted by banks and card operators for Internet payments. The purpose of Verified by Visa is protect customers and banks against fraud and card/identity theft. While a thief/fraudster may be in possession of a stolen card or card details, they will still struggle to complete payments due to Verified by Visa. As the picture below shows, to complete an Internet payment, the Verified by Visa system will require the card owner to enter a password/personal message to complete the transaction. Setting up Verified by Visa is easy, when a customer -- who doesn't have Verified by Visa setup on their card/account -- makes a purchase, at the end of the transaction their bank will prompt them -- with a box similar to the one below -- to signup with Verified by Visa by creating a password/personal message. To complete the registration of Verified by Visa, the customer will need to enter some personal information about themselves to verify their ID.
(Pictured: Verified by Visa popup box that appears during the payment process)
When setup, customers will not always be required to enter a Verified by Visa password for every transaction: banks have sophisticated software that will calculate the possibility of the transaction being fraud. If a transaction is one that matches a purchase history -- such as grocery shopping from Tesco every week -- then the banks software will probably 'wave' the transaction through automatically without initiating Verified by Visa. The same will probably be true for small purchases from well known 'reputable' retailers; such as Amazon. When Verified by Visa is most likely to be initiated by the bank is when a large purchase, from a retailer the customer has never purchased from before, is made. Basically for transactions the bank/card operators views as higher risk in relation to fraud.
Does Verified by Visa protect customers 100% against fraud? no, because if the fraudster knows enough about the card/account owner -- such as a family member or friend -- it may be possible for them to reset the Verified by Visa password; though the bank may warn the customer via a text message/email/telephone call. What Verified by Visa does do, is make it harder for fraudsters to make transactions on stolen cards/information. Is Verified by Visa mandated? no, but banks and card operators may insist on it to authorise some payments. Verified by Visa is not a company, it is a service offered to banks and card operators by Visa. Therefore, if someone is contacting a customer -- via email, telephone etc -- claiming to represent Verified by Visa it will be a fraudster looking to steal information.