What is 3D Secure?

3D Secure, or 3DS, is a security measure that protects consumers and merchants by reducing the likelihood of unauthorized online transactions. 3DS is an Arcot Systems and Visa product developed to improve digital payment security and provide a more consistent online shopping experience.

When a cardholder makes an online purchase, 3D Secure requires them to complete additional authentication, such as a one-time password (OTP), a mobile push notification, or a biometric verification, depending on the card issuer’s setup.

3D Secure works within a system that enables efficient transactions while ensuring authentication steps are followed, which is especially important for online shopping. While it may come with some drawbacks, the trade-off of 3D Secure is balanced by its security benefits and adaptability to various mobile devices.

In addition to 3DS being an incredible security feature that further protects online payments, there are some other reasons it’s essential.

Why 3D Secure is essential

While 3D Secure revolutionizes the payments industry with innovative technologies that give businesses the comfort of accepting secure online payments, this authentication method offers much more than an extra layer of security.

3DS is essential because it:

• Mitigates unauthorized access: 3D Secure protects card details from unauthorized access.
• Reduces fraud: 3D Secure prevents fraudulent transactions by verifying the cardholder.
• Provides safer online shopping: 3D Secure enables the successful processing of eCommerce transactions while ensuring authentication steps are followed, which enhances consumers’ confidence by making them feel safer when making online payments.
• Complies with regulatory standards: 3D Secure meets regulatory standards, such as the Payment Card Industry Data Security Standard (PCI DSS), the Federal Trade Commission (FTC) guidelines on consumer protection, and the Dodd-Frank Act, aimed at enhancing security for online transactions and fraud prevention for consumers and merchants.

Overall, 3D Secure offers card providers and holders a more secure framework for online payments, fostering safer online shopping environments and promoting interoperability across different security domains.

How a 3DS transaction works

3D Secure operates through a structured process during the online checkout to ensure all security checks are in place.

The transaction typically begins when the cardholder enters their credit or debit card information on the merchant’s online payment page. Once the card details are submitted, the system verifies whether the card details were entered correctly in the 3D Secure program. If it is, the card issuer’s 3D Secure system is activated and takes over the authentication process.

After entering card details during the payment process, such as the number and expiration date, the system may direct the cardholder to a page provided by the card issuer. Here, an additional authentication method is employed, like sending an OTP via SMS or using a mobile app for the customer to enter. This layer of security is intended to verify that the legitimate cardholder is initiating the transaction.

Once the card issuer’s system receives the authentication data, it evaluates the information provided by the cardholder and approves or denies the transaction. If the authentication is successful, the merchant and cardholder are notified that the transaction has been confirmed. The payment process continues as usual by transferring funds from the cardholder’s account to the merchant’s account.

While 3D Secure introduces a strong layer of authentication that aims to protect all parties involved in online payments, this authentication method may differ depending on its version and the card issuer.

The different flows of 3D Secure

During the 3DS process, two potential types of security authentication flows may occur. These authentication methods include the challenge flow and the frictionless flow.

Challenge flow

Suppose the automated authentication during the 3D Secure process raises red flags or additional verification is needed. In that case, the cardholder may be redirected to a challenge flow. The challenge flow involves an extra authentication step where cardholders must provide further evidence to confirm their identities.

The challenge flow is typically invoked when the initial information is insufficient, or the transaction is deemed higher risk. For instance, cardholders may need to answer security questions, input an OTP they’ve received on their mobile phone, or use their banking app to authenticate transactions.

This additional layer of security ensures that even if card details have been compromised, the chances of a fraudulent transaction going through are significantly reduced. This level of 3DS can lead to less risk of fraud and chargebacks for merchants and give customers peace of mind knowing their sensitive information is protected.

While the challenge flow strengthens security, merchants may want to implement more efficient security measures that ensure a more fluid online shopping experience.

Frictionless flow

3DS can also provide a frictionless flow, a security protocol that applies a more seamless authentication process for online payments. It provides a layer of security that utilizes data analysis to evaluate real-time transactions, determining the risk level associated with a given online transaction without impacting checkout times, thus enhancing the user experience.

If the risk is low, the transaction may bypass the additional authentication step typically required by 3D Secure. This means the customer can complete their payment without inputting an OTP or other form of additional authentication.

Ultimately, frictionless flow helps balance securing online payments and streamlining the checkout process, especially on mobile devices where entering additional details may be inconvenient.

Revolutionizing the payments industry with 3D Secure

3D Secure is an essential protocol for enhancing online payment security, protecting against unauthorized transactions, reducing fraud, and ensuring compliance with regulatory standards.

3D Secure enables businesses to implement robust security measures to protect sensitive payment data while delivering an efficient online checkout process, making it a valuable tool in today’s digital payment landscape.