As of 15 October 2022, Visa will no longer support 3-D Secure 1 (3DS1) and related technologies. But there is still time left to get your business in compliance with the latest regulations on card payment authorisations.
Even though acquirers and issuers have had time to implement new technologies like 3D Secure 2, we know that a significant portion of SMEs have yet to implement new payment processes and transaction flows to comply with the new regulations.
The previous article in this series gives you step-by-step instructions for getting set up with 3DS2 to help you avoid a negative impact on your customer experience and conversion rates.
In light of the looming deadline, today we’re covering the top 7 reasons why you should make that switch as soon as possible for your business:
1. Improved user experience
The new 3D Secure 2 (3DS2) is more intuitive than 3DS1. Users can purchase goods/services when a transaction is trusted and await a payment confirmation message. An OTP or fingerprint scan will be required when a transaction is deemed suspicious.
Compared to 3DS1, which offers multiple authentication errors, including page redirects and multiple confirmation messages, this process is much easier and provides a better user experience.
2. Boosted conversion rates
Having fewer barriers in the payment flow means more conversions for merchants. There are some product categories that have high fraud risks, like high ticket electronics, so it’s tough to buy with a credit card without authentication.
3DS 2 allows merchants to sell these products online to clients who previously could not purchase them. By doing so, they will be able to increase sales without having to deal with high-fraud losses and also reach customers who lack credit cards by offering a positive shopping experience for debit card users.
3. Approval rates are up
When 3D Secure doesn’t work, it means 3D Secure was attempted but failed. Fraud, wrong password, abandoned checkout, or a technical issue with 3D Secure could cause this.
3DSecure 1 (3DS1) can support simple online authentication. But EMV 3DS (or 3DS2) has an advantage – it’s designed to overcome 3DSecure (3DS) version 1’s poor user experience. Compared to the legacy version, it has 10x the data capacity of 3DS1, which means that there is a good probability that your approval rates will not be affected by technology limitations.
With access to hundreds of key data points in a single transaction, issuers can authorise legitimate transactions and reduce false declines.
4. Robust fraud protection
All merchants can benefit from 3D Secure 2, but those with a high rate of chargebacks with “not authorised” reason codes will experience the greatest ROI – typically for sectors such as health and beauty, electronics, gaming, insurance, luxury goods, digital goods, subscriptions, or services.
5. Transfer of liability
Implementing 3D Secure 2.0 allows banks, merchants, and card issuers to share data collaboratively.
Merchants benefit from 3D Secure 2.0 because it shifts fraud liability from retailers to banks, which are usually better equipped to handle it.
Due to this, they have been able to save a lot of time since they don’t have to deal with fraudulent chargebacks and fraud complaints anymore.
6. Lower fees
Merchants and issuers who fail to comply with 3DS2 will face higher fees starting on October 15, 2022. These fees are designed to promote the adoption of the new 3DS2 protocol and its overriding aim of reducing card-not-present (CNP) fraud.
The ultimate purpose of 3DS2 adoption isn’t just to avoid these fees or to comply with the regulations but to build a more reliable, secure, and intelligent authentication ecosystem.
7. Staying compliant
As required by the second Payment Services Directive (PSD2), 3DS2 meets the requirements for Strong Customer Authentication (SCA), which is mandatory in the UK and Europe.
Moreover, globally, PSD2 is a guideline for payment industry regulation. By complying with its requirements, a business can expand globally without a lot of complications.
Get started with 3DS2
Because Trust Payments understands the challenges associated with the 3DS2 requirements, we offer our fully-fledged payment solution, TRU Connect, for a frictionless payments experience. Thanks to this technology, your conversion rate and chargebacks will be a thing of the past.
