What is 3D Secure?
3-D Secure, also known as the 3-domain structure, is a way to prevent online fraud when using credit or debit cards. It’s also known as payer authentication. This security method provides additional security for the cardholder as well as the merchant.
In the course of an online purchase when you pay, 3D Secure provides an additional layer of security to protect against fraudulent card use. The information is collected through a challenge to the purchaser. The challenge will gather information supplied by the cardholder along with their smartphone, or data gathered by the bank that issued the card through the use of a single SMS code biometrics, bank apps, or other methods.
This security measure safeguards your card from charges due to fraud. The responsibility for chargebacks is transferred to the card’s bank.
How Do 3D Secure Transactions Work?
This is a step-by-step guide on the way the 3D Secure transaction works.
- The payment gateway communicates with the directory server and is informed that the card has been accepted by the program.
- The transaction process is directed to the bank’s website for the cardholder.
- The cardholder inputs the card details and transaction details are then sent at the time of the transaction to the banks.
- 3D Secure asks the buyer to input a password or prove their identity by using a unique password.
- The purchaser confirms their identity. The verification process is handled by the bank that issued the card.
- The authentication process is handled by the gateway for payment. The gateway sends transaction details directly to the financial institution.
- The customer transaction is either approved or declined.
What Are the Three Domains of 3D Secure?
This security protocol is based on the exchange of data between three domains. Find out about the three distinct kinds of domains that comprise 3D Secure.
This domain comes from the bank of the customer that issues their credit card. It is the account from which the money is deducted for the transaction. The domain of the issuer is composed of various components.
- Cardholder browser as well as related software: It is here that the client inputs their initial information that initiates an encryption protocol.
- Server for enrollment: The user is enrolled in the process of authentication on this server.
- Access Control Server: The server can authenticate the identity of the cardholder as well as verifies that the validity of the credit card.
- The validation server: This server confirms the identity of the cardholder.
The bank that manages the seller’s account is called the acquirer domain. It is the account of the bank receiving the funds directly from the sale. The domain that is used to acquire money is comprised of two parts.
- Plug-in for merchants: After the transaction is completed at the end of the cardholder’s account the merchant plug-in generates and processes the cardholder’s authentication codes.
- Signature validation servers: This server authenticates the digital signature of an authenticated purchase.
The interoperability domain is responsible for deciding the network that is needed for the transaction. The interoperability domain is comprised of two components.
- Directory Server: It checks whether an account number is tied to a credit card scheme, and then transmits the information to an access control server.
- Certificate authority: This creates as well as distributes card schemes, SSL server, signed digitally and public root certificates to all domains.
What is 3D Secure 2.0?
3D Secure 2.0 was created in 2016 and then updated in 2017 to develop the latest protocols to facilitate online transactions. The new protocols significantly improved the user experience when using 3D Secure which made the process of checkout easier and more smooth. Here are a few benefits 3D Secure 2.0 brings to the table.
- Better shopping experience: With more customers shopping via apps, 3D Secure 2.0 improves the shopping experience for shoppers by authenticating transactions that are app-based rapidly and smoothly.
- Enhanced data sharing: It allows for an enhanced data sharing system among the issuing bank and merchant banks that acquire cards and allows the bank issuing the card to make better decisions about risk.
- Improved authentication: This new protocol offers customers greater options to authenticate themselves in transactions, such as using a biometric or one-time password.
- Single authentication: Instead of going through a redirection of the browser 3D Secure 2.0 lets customers undergo a single authentication message flow. The speedier checkout process enhances the user experience on mobile devices.
Simpler Payments for Digital Credit Card by using Dynamic 3D Secure
3D Secure authentication, in its initial version, could make payment processing more difficult and cause sales to be lost.
Additionally, since 2FA is required for security, Europe introduced PSD2 and SCA regulations in the years 2019 and 2020. 2FA offers many benefits for online shopping — some of which we’ve detailed in the following section.
Each time a transaction is made, 3D Secure solution will try to authenticate the customer without contact by the cardholder. It is Dynamic 3D Secure, also known as “Frictionless Challenge”, and gives the best of both worlds in two-factor authentication.
Dynamic 3D Secure also helps to balance protecting yourself from fraud while also simplifying the process of making digital payments.
Its Dynamic 3D Secure evaluates each transaction on the basis of risks, such as customer behavior, location, and contact details. Any suspicious activity is directed to a 3D Secure challenge to reduce the risk of fraud. Transactions with high risk are screened but are not blocked until confirmed that they are necessary.
Transactions that are deemed to be low risk won’t be challenged. This means that the cardholder is able to pay with no interruption. Dynamic 3D Secure means that your drop-off rate to customers is reduced, as well as your rate of conversion rises.
The Benefits of using 3D Secure for E-commerce
3D Secure offers a number of advantages in the world of e-commerce. Let’s look at a few of them.
- Reduces the chance of fraud: With added layers of security, it is much harder for fraudsters to make online fraud. Customers can rest assured that they are shopping through a legitimate business and your company is secured from fraud using credit cards.
- Provides more security to merchants and customers: Customers can also use additional layers of security to ensure the information on their cards is secure. As more businesses use 3D Secure, it becomes much more difficult for thieves to steal and access their debit or credit card details. Merchants are safe from chargebacks since the bank that issued the card is responsible for the charge. Every transaction is protected by SSL encryption, which protects the data when it changes hands between financial institutions making the transaction as secure as possible for everyone involved.
- Enhances customer experience: A happy customer leads to increased sales. With more secure payment and simpler checkout, your customers will be returning to purchase again.
- Allows for greater international transactions: Your customers can feel more confident doing international transactions thanks to the additional security. This can expand merchants’ reach into new countries and provide customers with more purchasing options.
Why Adopt 3D Secure 2?
3D Secure 2 is set to become the prime authentication method for online card payments, thanks to a number of updates that improve not only the security but also the consumer experience of 3D Secure 1 (3DS1).
|No More Static Passwords||The days of rummaging through your drawers to find your 3D Secure password are over. Consumers will no longer have to look for their passwords and are more likely to complete their purchases.|
|Two-Factor Authentication||3DS2 implements two-factor authentication. To make the experience more convenient for consumers, authentication can be completed, for example, with a token and a simple thumbprint.|
|Fewer False Declines||The new protocol provides ten times more information to the issuers, which helps drastically reduce the number o false declines. Consumers will retain their trust in 3DS2-secure transactions.|
|Mobile Enabled Security||Consumers will no longer be redirected to potentially non-mobile-ready authentication pages.|
|Less Cart Abandonment||Overall greater convenience, a faster checkout process, and a seamless shopping experience will reduce shopping cart abandonment by 70%.|
|Merchant Opt-Out||As a merchant, if you decide on 3DS2, you regain the freedom to choose which transactions you send through the protocol and which ones you don’t. However, please keep in mind that issuers may have to decline the transaction because SCA is required on their side.|
How do I get started by using 3D Secure Payments?
Are you looking to take your online company to the next step? 3D Secure Payments protect your business from chargebacks and provide your customers security.
We understand how crucial security online is, particularly when it comes to financial transactions. We provide top-of-the-line security, so you can concentrate on creating relationships with your clients and receiving their payments.