What is 3D secure?
3D Secure is a technology used in credit processing to authenticate transaction information. Introduced by Visa in 2001, this fraud prevention tool also goes by the name of 3DS or Verified by Visa. In support of streamlining payments online, major credit card companies wanted to reduce the risk involved in Card Not Present (CNP) transactions. In order to do this, they verify card details and validate a customer’s identity using multiple methods of confirmation.
3D Secure Visa
The 3D Secure Visa verification system is recognized and used by other major credit card companies. Mastercard calls it Mastercard Secure Code while American Express chose the name American Express SafeKey. There is even Capital One 3D Secure. Nonetheless, the process each of these card companies use is essentially the same.
What Is 3D Secure?
What is 3D Secure? If you purchase goods online, there’s a good chance you’ve utilized 3D Secure without knowing it.
A more accurate name for 3DS is 3D Secure Payment gateway. To better understand what it does, let’s take a look into the technology that makes it work.
3D Secure Payment Gateway
A gateway is an application that connects a website to a merchant account. Online stores and e-commerce platforms use payment gateways to send information to the parties involved in a transaction. Needless to say, it’s imperative that this information is fortified against fraud and security breaches.
Adding layers of verification and validation through online channels helps keep information from getting in the hands of malicious scammers. Additionally, by reducing the risk of online payments, more customers are likely to utilize internet stores for their shopping needs.
3D Secure Password Protection
How it works
When making verifying payment information, there is always two parties involved, the one submitting information and the one receiving it. The added level of security is established when the customer verifies their 3D Secure password through a secondary means. In other contexts, this might be called 2-step verification, and in this case it relates to the internal processes that occur when making sure the customer and information entered is legitimate.
This means that:
- Businesses can trust that a transaction is fraud free
- There are more online transactions made and sales increase when there is shared security
- Customers are assured their information is safe and not used by fraudsters
- Decreases operating costs associated with chargebacks and fees from returned items
The main advantage of 3D Secure for Members is the reduction in disputed transactions and the resultant exception handling expense and losses. It is expected that nearly 80% of all e-commerce chargebacks and fraud, and a substantial proportion of customer complaints, could be eliminated with the use of Authenticated Payment. This will have a positive impact on Member profitability.
A less tangible, but nevertheless real, benefit is the assurance members can provide to their cardholders who are considering e-commerce transactions. Studies indicate that as many as a third of cardholders are afraid to shop online due to security concerns. Authenticated Payment may convince prospective ecommerce shoppers that it is safe to use their card online.
Benefits of Cardholder
- Increased consumer confidence when purchasing
- No special software is needed at the cardholder device
- Easy to use
- Control over card use for online purchases
Benefits of Merchants
- Minimal impact on merchant’s interaction with consumer
- Increased sales by enhancing consumer confidence
- Reduced risk of fraudulent transactions
- Decrease in disputed transactions