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Credit card fraud prevention is essential for all parties in the payment ecosystem. While consumers are careful to protect their card details and personal information, the burden of dealing with fraud—such as chargebacks, investigations, and financial losses typically falls on merchants, card issuers, and payment service providers, not the shoppers themselves.
For businesses involved in e-commerce, payment processing, or card issuing, proactive fraud prevention isn’t just about compliance it’s about preserving customer trust and financial stability. The good news is that solutions like Logibiztech’s 3D Secure authentication system offer a powerful way to protect all stakeholders. By adding an advanced layer of verification during online transactions, this solution helps authenticate users securely and significantly reduces the risk of unauthorized payments.
With Logibiztech’s 3D Secure solution, merchants, issuers, and payment platforms can work together to create a safer, more reliable digital payment environment.
You may be wondering what the term “domain” means in the context of 3D Secure. The “3Ds” in 3D Secure represent three key domains involved in the transaction authentication process:
Issuer Domain – This is the cardholder’s bank or card issuer responsible for verifying the user’s identity.
Acquirer Domain – This includes the merchant and the acquiring bank that processes the transaction.
Interoperability Domain – This domain facilitates the communication between the issuer and the acquirer through infrastructure provided by card networks like Visa or Mastercard.
When a customer makes a purchase online, the acquiring bank initiates the transaction. The authentication step is triggered through the issuer domain, which confirms the identity of the cardholder. This verification process happens within the interoperability domain, ensuring secure communication between the parties. If a card is enrolled in 3D Secure, such as through Visa Secure or American Express SafeKey, the system validates the transaction using these protocols.
However, as credit card fraud particularly card-not-present (CNP) fraud continues to rise, the challenge lies in protecting stolen card data from being used during online transactions. While consumers must remain vigilant, the responsibility for preventing fraud should not fall solely on cardholders. Every participant in the payment ecosystem issuers, acquirers, payment processors, and merchants has a shared responsibility to implement secure systems and protocols to protect sensitive cardholder data and ensure secure transactions.
The prevention of card fraud including credit and debit within the industry of payments since it is a major reason for loss of profit for online merchants as well as a source of stress for consumers. The concern of identity theft which is a major cause of fraud in the payment industry has risen dramatically.
Consumers are careful about guarding their credit card numbers as well as personal details from thieves who could wreak ruin on their credit score however, the responsibility to fix fraud on credit cards is the responsibility of merchants and card issuers and not online consumers.
Based on the 2021 Nilson Report, the financial losses due to debit and credit fraud on merchants, acquiring banks, and issuing banks totaled $28.58 billion by 2020. Of all the affected parties the card issuers took on 80 percent of the burden. Fraudsters could cost merchants merchandise, and increase transaction fees, as well as customers. In addition, banks that issue certificates are unable to save time and money dealing with chargebacks. Criminals who illegally access the personal details of customers violate the customer’s trust and impact the bottom account of both the financial and financial services sectors.
The use of debit cards as well as credit cards in place of cash at the point of sale or online transactions is on the rise. Europe’s top six debit and credit card issuers raked in more than $1.2 trillion in transaction volume for 2020. The rate of a transaction is anticipated to rise by 41.4 percent for cards like Visa, Mastercard, American Express, Discover, UnionPay, and JSB and the number will increase to 642 billion in 2025. There’s a significant incentive to identify and stop the fraudulent use of credit cards to safeguard customers, and brands and lower the cost of credit card and debit card fraud.
Since e-commerce is becoming the norm for purchasing almost everything online, fraudsters from eCommerce find and exploit vulnerabilities everywhere, including sales channels as well as payment methods.
For instance, criminals can take card information like the card’s number, validation value, date of expiration, and cardholder’s name from the magnetic stripe through tampering using the reader. Card skimming is a lot harder to accomplish due to the EMV chips or smart chip technology. However, fraud prevention in-person prevention is a major factor in the rise in fraud on credit cards because fraudsters constantly change their selling channels.
In addition, CNP fraud is difficult for merchant payment gateways and payment service providers to identify due to two reasons. There are two reasons. First, there are lots of kinds of CNP fraud to deal with such as innocent fraud (common) to fake identity theft (uncommon and highly sophisticated). Additionally, eCommerce CNP fraud doesn’t rely upon stolen credit card details. In fact, it is possible for cyber criminals to utilize your login and passcode or even be connected to the cardholder.
If the transaction is believed to be fraudulent, what should the first thing a credit card company do? They will challenge the suspect fraud. If the bank that issued the card is not right and a legitimate transaction is rejected. What is a consumer to do? They could use another card or go to another site for eCommerce that can fulfill. Who wins? It is possible to claim that all three victims of fraud on credit cards. Which one is the biggest victim? According to Visa Credit Card Fraud, it is predicted to cause businesses to lose USD75 billion from 2019 through 2023 all over the world.
Fortunately that the 3D Secure 2 fraud prevention solution can reduce the risk of false denials and protects the client as well as the bank that issued the card and the merchant from fraudulent transactions.
The prevention of fraud on credit cards is essential to reducing the risk of debit and credit card CNP fraud. Banks that use the most precise authentication system, 3D Secure 2, have reduced fraud by 40 percent and cart abandonment by 66% and reduced the processing time of payments by 80percent.
A businessman points to a shield protect icon, which might be for an internet firewall, insurance, or computer virus cleaning. Cyber security is a concept that protects your data.
Since fraudsters have a variety of ways to get access to credit card data such as phishing, skimming, and buying them on websites that are dark, 3D Secure 2 solutions utilize an enhanced dataset to ensure a secure authentication of the customer.
Since 3D Secure 2 is mobile-enabled and is not dependent on an online browser it is able to access additional conditional information that aids to spot and reduce the risk of transactions that are deemed to be fraudulent, such as:
Furthermore, 3D Secure 2 provides greater interoperability among online merchants and financial institutions that issue cards. There are challenges to suspected fraud that be made between the card issuer and the cardholder. When removing the merchant from this procedure, in the event that the transaction is not authorized and a chargeback is placed in the process, liability shifts from the cardholder to the issuing bank. The best part is that the enrollment process for 3D Secure 2 for most international card schemes will become automatic by the end of October 2022.
Merchants on the internet and card issuers have a common page in the fight against the security of credit cards. Cybercriminals are constantly finding new methods of obtaining credit card data every party should employ methods and strategies to keep fraudsters off their tracks. The Logibiztech 3D Secure fraud-prevention solutions designed for issuers as well as merchants can give your customers peace of mind and lower costs associated with CNP fraudulent rates. Get in touch with us for more information regarding Paybiz3DS2 as well as PaybizACS.
By utilizing mobile payment applications such as Apple Pay or Google Pay, you can enhance your credit card fraud protection. These apps implement a technology known as tokenization, which enables you to make payments without disclosing your real credit card account number.
The majority of payment card fraud investigations are managed by the bank that issued the card to the cardholder, rather than by a card network such as Visa or Mastercard.
With many years of rich experience in technology development, Logibiz Technologies aim to boost your online presence by offering 360-degree solutions related to Online Payments and its Security.
From Online Fraud Prevention solutions to White Label Payment Gateway Platform and complete 3DS testing environment, Logibiz has got your back. Additionally, we also offer consultancy services for all your EMVCo & Card Scheme certification needs.
We provide Free Demo & POC of our products which are certified globally and trusted by leading Financial Institutions worldwide.
Book a Free Consultation Call with our experts to discuss how we can help grow your online payments business.
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The 3DS Server provides a functional interface between the Directory Server (DS) and the 3DS Requestor Environment flows. 3DS Server is responsible for gathering necessary data elements for 3-D Secure messages, authenticating the DS, validating the DS, the 3DS SDK, and the 3DS Requestor, safeguarding the message contents. The 3DS Server also helps to protect the message content while it is being transferred to DS and vice versa.
