Until recently, we have all been using the 3D Secure protocol, which adds an extra security layer to prevent unauthorized online transactions.

Here’s more on that. 

What is 3D Secure? How does it work? 

3D Secure is a security protocol that includes processes, tools, and frameworks developed to enhance the safety and security of online credit and debit card transactions. 3D refers to the three domains that interact while using the protocol: the merchant or acquirer, the buyer or issuer, and the interoperability domains. These domains work together to verify the cardholder’s identity and ensure the transaction is legitimate. 

When a cardholder purchases online, the 3D Secure protocol authenticates their identity using a password or a one-time code sent to their registered mobile number. This additional step helps ensure only the card’s rightful owner is making the transaction. 

The merchant then sends the transaction data to the issuer domain, which verifies the card details and checks if the transaction is within the cardholder’s credit limit. If everything checks out, the issuer sends an authorization code back to the merchant, and the transaction is completed.  

3D Secure has become an industry standard for online payment security and fraud protection. It is widely used by major card networks, including Visa, Mastercard, and American Express. 3D Secure also allows businesses to hold the issuer bank liable for chargeback and fraud, reducing revenue leakage and increasing profitability.  

Where does 3DS 1.0 fall short?  

3DS 1.0 has been a popular fraud mitigation tool. However, this security protocol has a few limitations that stem from – 

• Poor user experience: Some users are unable to view the 3DS authentication page on their devices. Manually typing OTPs, PINs, and passwords can be a hassle.  
• Lower success rates: This is typically caused by the added step required for authentication. 
• Multiple password management: Remembering different passwords for each account is inconvenient.  

The friction in user experience causes high chances of cart abandonment and transaction failures. This is bad news for any business. But there is a solution to that. 

Introducing 3DS 2.0  

3D Secure 2.0 is an update of the original 3D Secure protocol, providing a more streamlined and user-friendly experience. The new protocol is developed by EMVCo, a global organization that facilitates the interoperability and acceptance of secure payment transactions.  

Key features of 3DS 2.0 

• Includes modern authentication methods such as biometric recognition, one-time passcodes, and mobile authentication. This enables a convenient yet secure checkout process.  

• Has the ability to collect additional transaction data such as device location, user’s location, and merchant’s transaction history. This helps issuer banks make more informed decisions around accepting or declining a transaction, reducing risk while improving user experience. 
• Improved risk-based authentication, allowing issuer banks to set risk thresholds for different types of transactions. 

3DS 2.0 is the logical next step in the evolution of digital payments as their popularity and e-commerce grow faster. Businesses need to adopt the latest security protocols to protect customer data and provide a seamless, secure checkout experience. According to Visa, 3DS 2.0 reduces – 

• Checkout times by 85% 
• Cart abandonment by 70% 

3D Secure 2.0 authentication mechanisms  

1. Frictionless Flow 

An authentication method that enables a seamless and effortless checkout experience. It uses behind-the-scene data analysis to assess the risk of a transaction. If the risk is low, the authentication process is completed automatically without intervention from the customer. This means the customer does not need to enter another password or code to complete the transaction. Frictionless flow is ideal for low-risk transactions and provides a smooth checkout experience. 

2. Challenge flow 

This method requires customer interaction to complete the transaction. Challenge flow is triggered to prevent fraud in high-risk transactions or when additional authentication is required. In this case, the customer is prompted to enter additional information to verify their identity, such as a one-time password sent to their mobile device. 

Adopt PayU’s robust 3DS 2.0 SDK  

PayU has launched its 3DS 2.0 software development kit (SDK) – the industry’s first 3DS 2.0 SDK – certified by EMVCo. The solution is lightweight (<100KB) and easy for businesses to integrate. Developers can find all comprehensive integration guides here.

PayU’s 3DS 2.0 SDK can enable merchants to always provide a secure and seamless checkout experience. Click here to read the complete 3DS 2.0 SDK integration guide.

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