3-D Secure Technology How It Works and Why You Should Implement It

As eCommerce gets more and more popular, online transactions are becoming second nature. With more transactions, though, comes more opportunity for fraud and theft. That’s the main reason why cardmember associations like Visa and MasterCard spend so much time developing technologies for effective fraud prevention.

One of those technologies is called 3-D Secure, although you may know it by many other names. Here’s a quick overview of how 3-D Secure can help your business.

What is 3-D Secure?

3-D Secure is an XML-based protocol that allows merchants to take advantage of an additional layer of security for their eCommerce transactions. This technology was developed by Visa and Arcot Systems and has since been implemented by all major card networks under different names, such as SafeKey, ProtectBuy, or MasterCard SecureCode.

The first version of 3-D Secure (1.0) had several limitations, including a clunky system for confirming a customer’s identity. 3-D Secure 2.0 fixed all major issues, improved optimization for mobile, and added several other features, making it a more attractive option for merchants.

How 3-D Secure Works

If your system has 3-D Secure, the process is relatively simple. First, the customer will enter their payment information via phone or computer. Your customer will then see the 3-D Secure page which will ask them to enter an authentication prompt. To get past this page, the customer will need to enter their password or authentication code.

Once the customer enters the code, 3-D Secure allows your system, the issuing bank, and the acquiring bank to exchange encrypted information. This is a secure and convenient way to accurately verify the customer’s identity. Once their identity is confirmed, the customer will receive a notification that the transaction was successful.

Implementing 3-D Secure

There are plenty of benefits to adding 3-D Secure to your system, from reduced liability for merchants to fewer chargebacks and labor losses due to theft. That said, implementing 3-D Secure isn’t a simple task, and there are a few good practices to keep in mind.

First, you should have an extensive FAQ section that explains the 3-D Secure authentication process. Educating your customers in this way will help you reduce your cart abandonment rate, as many customers still perceive the need for authentication as a threat. You should also let the customers know that there’s no fee for this service in the checkout process.

When implementing 3-D Secure, you’ll have the choice between opening up a new authentication page and embedding it into the checkout process. Research shows that the second option is better, especially if the inline frame shows your branding in the page URL rather than the branding of the issuing bank.

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