As online transactions continue to grow rapidly, the need for secure and reliable payment methods has become more pressing than ever. In fact, by 2026, 24% of retail purchases are expected to be made online.
That’s where 3D Secure comes in. In this article, we’ll explore what 3D Secure is, how it works, and the advantages that it brings.
What is 3D Secure?
3D Secure is an authentication protocol that was developed by Visa to enhance the security of online payments. Mastercard and other major credit card companies later adopted it as well. The protocol is also known as Verified by Visa or Mastercard SecureCode, depending on the card brand.
This protocol was made to enhance the security of online payments and protect both the card issuer and the cardholder from fraudulent activities. It was developed to address the growing concern over the security of online transactions, which have been becoming increasingly common since 2001.
The 3D Secure protocol is used to verify the cardholder’s identity during an online transaction. This is done by requiring the cardholder to provide an additional authentication code sent to their registered mobile number or email address. The code is used to validate the transaction and ensure that the cardholder is indeed the authorised user of the card.
How does 3D Secure work?
Here are the steps involved in a typical 3D Secure payment:
Advantages of 3D Secure
The main advantage of 3D Secure is that it adds an extra layer of security to online payments. By requiring an additional authentication code, the protocol makes it more difficult for fraudsters to use stolen card details to make unauthorised transactions. This helps to protect both the card issuer and the cardholder from fraudulent activities.
Another advantage of 3D Secure is that it can reduce the risk of chargebacks. Chargebacks occur when a customer disputes a transaction and requests a refund from their card issuer. If the cardholder did not authorise the transaction, the merchant may be held liable for the chargeback. By using 3D Secure, merchants can ensure the transaction was indeed authorised by the cardholder, thereby reducing the risk of chargebacks.
However, 3D Secure is often linked to higher cart abandonment rates despite its effectiveness in preventing payment fraud. If the checkout process is lengthy, customers are more likely to abandon their carts.
What is 3D Secure 2.0?
3D Secure 2.0 is the latest version of the 3D Secure protocol. It was developed to address some of the shortcomings of the previous version, including the lack of support for mobile devices and the poor user experience.
One of the main improvements of 3D Secure 2.0 is that it supports a wider range of authentication methods, including biometric authentication (e.g., fingerprint and face recognition) and one-time passwords. This makes it easier for customers to authenticate themselves while still maintaining a high level of security.
Another improvement of 3D Secure 2.0 is that it provides more detailed transaction data to the card issuer. This allows the issuer to make more informed decisions about whether to authorise a transaction based on factors such as the transaction amount, the merchant’s reputation, and the customer’s purchasing history.
How do I enable 3D Secure?
You can enable 3D Secure by working with a payment gateway that supports the protocol if you’re a merchant. Most major payment gateways offer 3D Secure as an optional feature that can be enabled on your account.
Depending on your payment gateway provider, you will need to follow specific instructions to enable 3D Secure. Adding 3D Secure requires integrating the payment gateway’s API or adding a custom payment page.
Payment gateways also use fraud preventiontechniques like IP geolocation, device fingerprinting, and machine learning algorithms to detect and prevent fraudulent activities.
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