Keeping your customers safe online is an essential part of running an eCommerce business, especially considering the value of fraudulent transactions made with payment cards worldwide is projected to hit $38.5 billion U.S. dollars by 2027.
3D Secure authentication not only ensures that you’re meeting regulatory requirements but also provides a frictionless transaction for your shoppers when they make a purchase using your online store.
Keep reading to find out more about what 3D Secure is, what the main benefits are, and how it works to protect your valuable customers online.
3DS works as an additional layer of security to ensure that shoppers are protected online, by verifying the cardholder’s identity when making a purchase. The term 3-D means 3-domain and refers to the issuer domain, acquirer domain, and interoperability domain (the schemes).
This solution was first developed by Visa (now called Visa Secure) and has since been adapted by other card schemes like Mastercard (Identity Check) and American Express (Safekey), among others.
The latest version of the protocol, 3DS2, is armed with extra security features and achieves authentication using a wider range of data, as well as biometrics like fingerprint scanning and facial recognition. This version also provides a more seamless customer experience when compared to 3DS1, especially on mobile devices, making it less likely that the shopper will abandon the process altogether.
Card-present payments have come a long way since the magnetic strip, and the development of the embedded microchip on credit and debit cards reduced in-store fraud significantly. Unfortunately, this caused fraud attempts to shift online to card-not-present payments, where all that was needed was the CSC (card security code) - the 3-digit code usually printed on the back of credit and debit cards until 3DS was introduced.
With the introduction of 3DS, shoppers have an additional level of protection online, using an enhanced authentication process. The protocol also ensures that merchants adhere to Strong Customer Authentication (SCA) requirements after the revised Payment Services Directive (PSD2) was enforced.
Here are 3 benefits for merchants and customers.
1. With the SDK component added to 3DS2, merchants are now able to natively integrate this level of authentication into their mobile applications. This dramatically improves the shopping experience on mobile devices, including non-browser-based platforms.
2. Merchants can now ensure that the entire process keeps the look and feel of their brand instead of navigating away to a standard bank page. Considering shoppers often abandon their cart during this stage of the process, keeping the aesthetic of your brand will help the shopper feel more confident in a familiar environment.
3. More authentication options, like two-factor and biometric authentication, also help to reduce the drop-off rate during the checkout process and improve the shopper experience.
Intelligent, risk-based decisions are made with 3DS using predefined information - this information includes transaction details, the payment method, and the device being used by the shopper. This information is then automatically exchanged between the merchant/ acquirer, the issuer, and interoperability (the scheme).
During the e-commerce transaction in the checkout process, 3DS shares this information with the bank in order to successfully authenticate the shopper’s identity for a safer transaction. This prevents unauthorised transactions and creates a seamless and simple process for the customer.
Additional authentication is needed for a number of reasons, aside from regulatory requirements like the PSD2 and the need for SCA. Other reasons include unusual purchase patterns that don’t necessarily match the shopper’s typical consumer profile, as well as high-value transactions that could be riskier for the merchant. 3DS will support the required authentication in all of these scenarios and is flexible enough to allow issuers to manage their authentication preferences based on their specific requirements.
Issuers can then decide how they’d like their customers to be verified - this could be using a one-time passcode, knowledge-based questions, or biometrics. Future payments could also be authenticated during voice-activated transactions and will continue to develop as the payment environment evolves.
Implementing 3DS for your eCommerce business is simple - in fact, at EFTPOS NZ our payment solution has 3DS automatically built in. That way you’ll be able to rest assured knowing that you’re meeting any legal requirements, your customers are protected when using your online store, and that the authentication process runs smoothly.
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