What is 3D Secure and what does it achieve?
Before going into the crucial role 3D Secure 2 (3DS2) will play, let’s first understand its predecessor, the first version of 3D Secure (3DS). 3DS is an authentication protocol launched by Visa Secure, Mastercard Identity Check, ProtectBuy for Discover, Diners International, American Express Safekey, and J/Secure for JCB. Its aim was to reduce fraud, enhance identity security, and minimize merchant liability.
Originally, online purchasers were asked by their issuing banks to provide a password before enrolling in 3DS. Due to increased levels of customer frustration and shopping cart abandonment, advanced payment solutions offer hosted 3DS pages which enable buyers to conduct quick and easy checkout, thereby minimizing shopping cart abandonment.
Why do we need 3DS2?
The payments ecosystem has evolved significantly, and many transactions are made remotely via mobile phones. New protocols are required to provide more robust authentication capabilities. The European Union’s payment service directive PSD2, which will come into force in September 2019, has defined a new Strong Customer Authentication (SCA) regulation. The SCA must include a minimum of two out of three authentication elements: something the customer knows (such as a PIN); something they have (such as a smartphone number); and something the customer is (for example, their voice). All enterprises that sell to EU citizens will have to comply with this directive.
While 3DS2 compliance is only becoming mandatory in the European Union, it is beneficial for online and mobile businesses worldwide:
- The strong authentication capabilities of 3DS2 enable a liability shift for fraudulent transactions from the merchant to the card holders and/or card issuers once the said transaction is authenticated.
- 3DS2 was built for mobile phones and contains robust in-app authentication.
- According to reports, 3DS2 reduces checkout times by 85% and diminishes shopping cart abandonment by 70%. Increased conversions mean return customers and long-term loyalty for merchants.
- 3DS2 provides superior risk assessment due to the use of machine learning algorithms. In practical terms, this means that fewer transactions will be red-flagged needlessly and payment processes will be smoother and faster.
- 3DS2 supports a variety of authentication methods such as the biometric method (facial recognition, voice, fingerprint, etc.), enabling one-time authentication for each session.
- Customers using their mobile phones to make transactions will have more frictionless and secure payment alternatives at their disposal.
Just as the original 3DS was created to protect online CNP transactions, the improved version has been constructed to securely accommodate all of the newest forms of mobile ecommerce payments and digital wallets. There is good reason to believe that 3DS2 will go global once it becomes widespread in Europe. Don’t be left behind when it comes to the most effective tools to secure your payment processes.