What is 3D Secure and How it Works

3D Secure protocol can make your online payments more secure. A growing number of card providers, including Visa and Mastercard, have now adopted the 3D Secure protocol. In this article, we’ll explain what i 3D secure and how it works.

Understanding 3D Secure: Enhancing Online Payment Security

With the rise of online shopping, businesses and consumers are increasingly concerned about security and fraud prevention. One of the key technologies designed to address these concerns is 3D Secure. In this blog post, we’ll explore what 3D Secure is, how it works, and the benefits it offers for both merchants and customers.

What is 3D Secure?

3D Secure (Three-Domain Secure) is a security protocol designed to add an additional layer of authentication for online credit and debit card transactions. Developed by Visa and adopted by other major card networks like MasterCard (SecureCode), American Express (SafeKey), and JCB (J/Secure), it aims to reduce the risk of fraud in card-not-present (CNP) transactions, which are common in e-commerce.

The term “three-domain” refers to the three parties involved in the security process:

1. The Acquirer Domain: The bank and merchant receiving the payment.
2. The Issuer Domain: The bank that issued the card being used for the transaction.
3. The Interoperability Domain: The infrastructure provided by the card scheme (e.g., Visa, MasterCard) that connects the acquirer and issuer.

How Does 3D Secure Work?

Here’s a step-by-step overview of how 3D Secure typically works during an online transaction:

1. Initiating a Payment: When a customer makes a purchase on a website that supports 3D Secure, they enter their card details as usual.
2. Redirect to Authentication: Before the transaction is processed, the customer is redirected to an authentication page hosted by their card issuer.
3. Authentication Request: The card issuer prompts the customer to authenticate themselves. This can be done through various methods, such as entering a password, receiving a one-time passcode (OTP) via SMS, or using biometric verification like fingerprint or facial recognition.
4. Authentication Verification: Once the customer completes the authentication step, the card issuer confirms the identity of the cardholder.
5. Transaction Completion: If the authentication is successful, the transaction is approved, and the payment is processed. If the authentication fails or is not completed, the transaction is declined, thereby preventing potential fraud.

Benefits of 3D Secure

Implementing 3D Secure offers several advantages for both merchants and consumers:

1. Enhanced Fraud Protection: By requiring an additional authentication step, 3D Secure makes it much harder for fraudsters to use stolen card information to make unauthorized purchases. This helps to significantly reduce fraud and chargebacks, protecting both the merchant and the cardholder.
2. Liability Shift: With 3D Secure, the liability for fraudulent transactions often shifts from the merchant to the card issuer, provided that the authentication was successful. This shift can save merchants from financial losses and legal disputes related to fraudulent transactions.
3. Increased Customer Trust: Customers feel more secure when shopping on websites that use 3D Secure, knowing that their payment information is protected by an additional layer of security. This trust can lead to increased sales and customer loyalty.
4. Compliance with Regulations: In some regions, regulatory bodies have made it mandatory to use strong customer authentication for online transactions. 3D Secure helps businesses comply with these regulations, such as the EU’s Payment Services Directive 2 (PSD2), which requires strong customer authentication for online payments.
5. Improved Authorization Rates: Transactions authenticated through 3D Secure are more likely to be approved by card issuers, reducing the number of false declines and improving the overall shopping experience for customers.

3D Secure 2.0: The Next Generation

The original version of 3D Secure, while effective, had its limitations, such as interrupting the checkout process and leading to cart abandonment. To address these issues, 3D Secure 2.0 was introduced. The new version offers a more seamless user experience by incorporating risk-based authentication.

With 3D Secure 2.0, only transactions deemed high-risk require additional authentication steps. This improvement not only enhances security but also provides a smoother checkout process, reducing friction for legitimate customers.

Conclusion

In an era where online fraud is a growing concern, 3D Secure provides a robust solution for enhancing the security of online transactions. By implementing 3D Secure, businesses can protect themselves and their customers from fraud, build trust, and improve their overall transaction approval rates. As e-commerce continues to grow, adopting advanced security measures like 3D Secure is not just a best practice but a necessity for staying ahead in the digital marketplace

Have questions about 3D Secure, how it works or how it can help your business give us a call at 888 790 3450 or email info@ revolution-payments.com to learn more.