3-D Secure, otherwise known as 3DS, helps prevent online fraud with card-not-present transactions via frictionless authentication.
When enabled, a cardholder is required to authenticate their identity before the transaction can be completed.
Fraud Prevention Guide: 3-D Secure (3DS)
EMV® 3DS, by EMVCo, authenticates card-not-present (CNP) e-commerce transactions, promoting a frictionless payment experience. It only triggers extra verification for high-risk transactions, transferring fraud liability from the merchant to the cardholder and issuing bank.
What is 3-D Secure?
What are the three domains involved in 3DS?
"3D" stands for the three parties involved:
- The merchant’s acquirer/processor that accepts card payments.
- The issuer of the card used in the online transaction.
- The card brand/scheme network that connects them.
- The cardholder enters their card information to complete payment.
- If the card-issuing bank deems the transaction is low-risk, they approve the transaction.
- If the card-issuing banks deems the transaction high-risk, they may request additional verification. Verification methods vary by bank but are user-friendly for genuine cardholders.
- Once the cardholder is authenticated the bank approves the transaction.
What are common authentication methods?
- The cardholder may need to enter a passcode that the bank sends to their designated email address or phone number.
- The cardholder may need to provide answers to questions that only the real cardholder knows.
- The cardholder might need to use a biometric authentication method (fingerprint, voice, face recognition).
Is 3DS mandated for merchants?
3DS is 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, and 3DS is the easy answer.
3DS is not currently mandated for U.S. merchants, resulting in low adoption and missed benefits.
How is 3DS currently available in the US?
3DS is available from all major credit card networks and most issuing banks. Many card networks have packaged 3DS into a proprietary solution. For example, American Express offers SafeKey, Mastercard offers Identity Check, Discover offers ProtectBuy, and Visa’s Verified by Visa even helped pioneer the original protocol.
See how it works directly from Stripe, Sertifi's payment processing partner.
What are the benefits of 3-D Secure?
Reduce Fraud and Save Thousands
Implementing customer authentication like 3DS not only reduces fraud risk but also safeguards against revenue loss due to chargebacks.
Shift Payment Liability from Your Business to Card Issuers
3DS shifts chargeback liability from the merchant back to the card issuer. If the cardholder disputes a transaction for fraudulent reasons, the issuer is liable for the funds instead of you.
This is a valuable tradeoff for implementing payment authentication. Chargebacks result in lost revenue and time, so fewer chargebacks means spending more time closing business and taking better care of your customers. Plus, you’ll avoid potential chargeback fees and penalties as serious as losing your merchant ID.
As e-commerce activity inevitably increases, it’s important to implement the strongest security measures possible, including authentication measures like 3DS, so your customers find you reliable and trustworthy. Implementing a payment authentication step shows that you care about protecting your customers and their information.
Global merchants must meet the EU’s requirement for SCA (Strong Customer Authentication) and implement it across all regions where they do business.
How do I get started with 3-D Secure?
Contact your payment gateway provider. Here at Sertifi, we make it easy for you to accept online credit card transactions securely and frictionlessly and take advantage of fraud prevention methods like 3DS.
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