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3-D Secure: Stay Proactive About Hotel Fraud Prevention

Fraud continues to be a costly concern for the hospitality and travel industry. Commonplace preventative measures, like capturing CVV codes with credit card transactions, are no longer enough and teams are losing valuable time and revenue disputing fraudulent activity. Fortunately, new ways to proactively protect your business are becoming available every day.

3-D Secure (3DS) is a newer security standard you can adopt to secure online payment transactions and reduce the risk of unauthorized charges. The best part: most cardholders are automatically enrolled for 3DS by their card issuer, so taking advantage of 3DS is easy for merchants.

What is 3DS and how does it work?

3DS stands for 3 Domain Server because of the three parties it involves: the merchant’s bank account that accepts card payments, the issuer of the card used in the online transaction, and the interoperability system that connects them. 3DS adds a layer of protection to a payment transaction by requiring cardholders to authenticate their identity before the transaction can be completed.

Here’s how it works:     

  1. The cardholder enters their credit or debit card information into a website form.
  2. The system checks if the card is enrolled in 3DS.
  3. If enrolled, the cardholder is redirected to a 3DS webpage supplied by their card issuer.
  4. From the webpage, the cardholder enters a unique password or temporary code. The code will be sent to their designated email address or phone number, so only the person who has access to the account or device can access the code.
  5. If the cardholder successfully authenticates their identity, they’re redirected back to the website to complete their transaction.

What are the benefits to 3DS?

3DS doesn’t just protect the cardholder. It protects merchants, too. That’s because 3DS shifts payment liability back to the card issuer – so if fraudulent chargebacks occur, they’re responsible for mitigating the problem. This is a valuable tradeoff for implementing payment authentication. Chargebacks result in lost revenue and lost time, so fewer chargebacks means spending more time closing business and taking better care of your customers. Plus, you’ll avoid potential chargeback fees.

Aside from increasing revenue, the implementation of a payment authentication step shows that you care about protecting your customers and their information. As e-commerce activity inevitably increases, it’s important to implement the strongest security measures possible, including authentication measures, so your customers find you reliable and trusting.

For US merchants, adopting 3DS might be inevitable anyway. It’s already required in Europe thanks to the Strong Customer Authentication (SCA) regulatory requirement. SCA requires merchants to build an authentication method into their payment flow. 3DS is the easy answer.

How can you start taking advantage of 3DS?

The first step might be obvious: start accepting online payments, then work with your payment gateway and processing partner to get started. The right e-commerce partner will take the work out of making online payment transactions secure, reliable, and easy. It’ll also make it easy to access and adopt fraud prevention tools like 3DS. For example, a subscription to Sertifi comes with free advanced fraud tools, and our payment processor, SertifiPay, lets you easily prevent payment fraud using 3DS once the solution has been implemented.


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About the author

Mike Ryan

Mike Ryan is the enterprise director of payments at Sertifi. Mike brings over 20 years of experience in sales and payment technology. At Sertifi, he manages the strategy and adoption of payment solutions, particularly SertifiyPay, Sertifi’s proprietary payment processor – all aimed to make payments simpler and more secure for the hospitality and travel industry.