3D Secure for Payments Explained

In an era dominated by digital advancements, the landscape of financial transactions is constantly evolving. One such innovation that has gained prominence in recent years is 3DS for payments. Standing for 3D Secure, this technology has revolutionized the way we make online transactions, providing an extra layer of security and peace of mind for both consumers and merchants.

Payments in today's digital world

In an era dominated by digital advancements, the landscape of financial transactions is constantly evolving. One such innovation that has gained prominence in recent years is 3DS for payments. Standing for 3D Secure, this technology has revolutionized the way we make online transactions, providing an extra layer of security and peace of mind for both consumers and merchants.

What is 3DS?

3DS, or 3D Secure, is an authentication protocol designed to add an additional layer of security to online payments. it was the collaboration of major card networks under EMVCo (Europay, Mastercard, and Visa) that led to the development and standardization of 3D Secure as a universal authentication protocol. Visa was the first to bring it to market in 2001 as Visa Secure and has since been adopted by other major card networks like Mastercard (as Mastercard SecureCode) and American Express (as American Express SafeKey). 3DS aims to reduce unauthorized transactions and enhance the overall security of digital payments.

How Does 3DS Work?

The fundamental concept behind 3DS is to authenticate the identity of the cardholder during an online transaction. When a user makes a purchase, the 3DS process kicks in, prompting the cardholder to provide additional information to verify their identity. This typically involves a one-time passcode sent to the registered mobile number or email associated with the card, to approve the transaction in the cardholder’s bank app.

The process unfolds in the following steps:

Initiation: The cardholder initiates an online transaction.
Authentication Request: The merchant's website sends an authentication request to the card-issuing bank.
Verification: The card-issuing bank assesses the risk associated with the transaction. Authentication: If the card-issuing bank finds it necessary, the cardholder could be prompted to provide additional information for verification. Strong customer authentication (SCA) is required in this case. The cardholder needs to complete a challenge, for example, it receives a one-time passcode from its card-issuing bank and enters it on the website to authenticate the transaction.
Authorization: With the authentication details, the transaction will be sent for authorization, and when approved, the purchase is completed.

The Benefits of 3DS

Enhanced Security: The primary advantage of 3DS is its ability to reduce the risk of unauthorized transactions. By adding an extra layer of authentication, it becomes more challenging for fraudsters to exploit stolen card details.
Global Acceptance: 3DS is widely adopted by the major card schemes globally, making it a standardized and recognized method for securing online transactions. This ensures a consistent level of security for users regardless of their location.
Consumer Confidence: Knowing that 3DS protects their transactions, consumers can shop online with greater confidence. This increased trust can lead to higher conversion rates for merchants.
Regulatory Compliance: With the increasing focus on data protection and privacy regulations, 3DS helps merchants and financial institutions stay compliant with industry standards and regulations.
Liability shift: this is a rule that protects the merchant from fraudulent transactions and occurs when the payment is authenticated through strong customer authentication (SCA).

Challenges and Future Developments

While 3DS has proven effective in bolstering online security, it is not without its challenges. Some users find the authentication process cumbersome, potentially leading to cart abandonment. In response, efforts are underway to streamline the user experience without compromising security.

Looking ahead, the future of 3DS may involve more players adopting advancements, such as biometric authentication, in the form of a fingerprint or facial recognition, providing a seamless yet robust method of verifying user identity.

Conclusion

As online transactions continue to surge, the importance of robust security measures cannot be overstated. 3DS for payments emerges as a key player in this arena, offering a reliable and standardized method to safeguard digital transactions. With ongoing innovations and improvements, 3DS is poised to play a crucial role in shaping the future of secure and trustworthy online payments.

Contact us

Interested in learning more about how Silverflow can help you with 3DS? Contact us today.