3D Secure: How it Works and the Advantages for Retailers

By TechFunnel Contributors - Published on April 7, 2022
3D Secure

Every time you use your credit or debit card to make an online purchase, you can opt to have 3D Secure perform an additional security check. For both customers and sellers, it improves overall security measures. When you activate 3D Secure, you’ll be prompted to enter your PIN every time you make a purchase.

There are “three domains” in the 3D abbreviation. Card issuers come first, followed by retailers who accept payments, and finally the 3DS infrastructure portals, which serve as a safe intermediary between customers and retailers.

3D Secure Authentication Components

By confirming that the cardholder is indeed the one making the purchase, 3DS authentication seeks to improve the payment security of the transaction. To put it another way, it works on the basis of a three-domain model.

  • First domain: Banks and businesses that accept credit card payments are referred to as “acquirer domains.”
  • Second domain: The environment of the issuing bank, where the card is being used, is known as the issuer domain.
  • Third domain: Those systems that enable the 3DS process by enabling the parties involved in the transaction to communicate and exchange information are referred to as the interoperability domain.

All parties engaged in a transaction are authenticated using digital certificates through the Secure Sockets Layer (SSL) protocol and Extensible Markup Language (XML) messages. Because of this, you’ll always be safe.

How does 3D Secure work?

What if you have 3DS activated on your website and you are a merchant? Your consumer is using a 3D Secure-enabled credit card to complete the purchase.

As an illustration, consider the following:

  • In the payment form, the customer provides their credit or debit card details.
  • Directory servers tell SecurionPay that their card has been registered in their software.
  • The 3DS page is displayed to the consumer when they need to enter their password or a one-time PIN to verify their identity with the issuing bank.
  • The 3DS authentication results are sent to SecurionPay, and we subsequently send the acquiring bank the transaction data.
  • The deal is approved by the acquirer.
  • The customer can see if the transaction is successful or not by looking at the response.

Customers may now proceed with their online purchases with peace of mind, knowing that an extra degree of protection has been added to the process. As a result, customers had to input an additional security code or password (given to their phone number via text message) before they could proceed with the payment process with 3D Secure 1.0, the first version of the technology.

In this case, the customer would return to the merchant’s website after successfully entering a code or password. The 3D Secure technology provides an extra layer of protection against fraudulent payments for businesses.

An updated version of 3D Secure, known as 3DS 2.0 or EMV 3DS, is now available for digital transactions, enhancing security and increasing the likelihood of a transaction being approved. The Payment Services Directive 2 (PSD2) of the European Union (EU) mandates the use of a Strong Consumer Authentication component (SCA) for all online transactions within the EU.

3D Secure 2.0 is a step up from its predecessor in that it permits the card issuer (bank) to utilize a wider range of transaction data points to conduct a risk-based analysis. This is required by the SCA. Without slowing down transactions, it provides an instant, secure, and accurate approach to authenticating customers without requiring a static password. For instance, the card issuer will not issue any additional authentication requests to the cardholder for low-risk and low-value transactions (i.e., below 30 EUR).

There is a 2-factor authentication (2FA) process in place for all customer-initiated transactions,  whether via app push notifications, text (SMS), or biometric methods (fingerprint, etc.). As a result, it is critical for a payment service provider to administer not just the new 3D Secure 2 authentication procedures, but also to appropriately apply exclusions for recurring payments and transactions of low value.

The responsive design of 3DS2 makes it user-friendly and suitable for use on any mobile device. Authentication window enhancements will be implemented by card-issuing banks; however, cardholders may see a different front end depending on their bank’s implementation of all UX improvements.


Benefits of 3D Secure technology

The technology was invented by Visa and licensed to MasterCard; thus, most major credit card companies currently use it. A PIN is only required if your bank detects a probable security risk when you have 3D Secure turned on, which is not always the case.

The most significant benefit of 3DS is its ability to decrease fraud while still being simple to use. As a result, online buying is more secure, people feel more secure, and sales go up.

Don’t forget that your brand’s long-term performance is based on a positive client experience.

3D Secure Advantages for Retailers

3D Secure is unquestionably a game-changing feature. For both merchants and their customers, this online payment authentication mechanism has many advantages. Most importantly, it raises the legitimacy of the firm and strengthens customer loyalty to the brand by making online shopping considerably safer.

Additionally, you may look forward to the following:

  • Liability reorientation

    Online businesses employing the 3D Secure payment authentication system rely on this mechanism to ensure that liability shifts on each properly validated transaction.

    Card issuers give protection after the liability assumption is done. Vendors are now responsible for obtaining confirmation of the terms and conditions relating to liability shifting.

  • Assuring greater security and reducing fraud

    Fraudulent transactions are less likely with 3D Secure, and questionable transactions are also less likely. Because fewer transactions are performed with the additional layer of protection, payments are safer.

  • Additional fees are not incurred.

    Pay attention when selecting a payment gateway; look for one that does not charge you extra to enable 3D Secure on your account.

  • There are fewer disputed transactions

    Merchants can reduce the number of disputed transactions and boost sales by implementing 3DS, which is designed to eliminate the sources of fraud.

  • An increase in the level of contentment among clients

    Customers are more likely to complete purchases on a website if they are confident that their payment information is safe.

  • SCA (Strong Customer Authentication) is a requirement for PSD2 compliance

    For the European SCA regulation, multi-level authentication is required to verify payments. 3DS2 is the main solution in this regard.

Is 3DS a Drawback?

Detecting if a 3D Secure pop-up is authentic can be challenging for some users, as they can redirect you away from the payment site. These pages are sometimes misconstrued as phishing scams by internet users. In contrast, 3D Secure only employs one-time codes, so your other personal information should be safe.

When you verify your identity with 3DS, the checkout procedure takes a little longer, but isn’t it worth the extra effort to ensure the security of your personal data?

Final Thoughts

There is no denying that the 3D Secure system is a cutting-edge online payment authentication solution that greatly improves transaction security and, as a result, the consumer experience by building trust in your brand.

TechFunnel Contributors | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicated to sharing unbiased information, research, and expert commentary that helps executives and professionals stay on top of the rapidly evolving marketplace, leverage technology for productivity, and add value to their knowledge base.

TechFunnel Contributors | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicate...

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