The move away from using cash as a method of payment means fraudulent transactions presents a much higher risk than before. With increasingly sophisticated attempts to fraudulently access funds, it’s clear more protection is needed for both merchants and consumers alike. As a result, 3-D Secure Authentication was launched initially by Visa via their Verified by Visa Program.
What is 3-D Secure Authentication (3DS)?
3-D Secure Authentication, typically just known as 3-D Secure or 3DS, is a protocol introduced by payment providers to add an extra layer of protection to payment transactions. It’s called 3DS because it uses three separate processes to authenticate a payment. The process makes it much harder for fraud to be committed and offers protection.
Although Visa first introduced the concept in 2001, it’s now used by all major card issuers for both debit and credit card transactions. Examples of similar 3DS systems include the American Express Safekey and the Mastercard Secure Code.
What is the 3-D Secure Process?
As a consumer, you’ve probably initiated a 3DS transaction many times without even realizing what you’re doing! If you’ve ever wondered why you’re being asked to enter an additional code, that’s most likely 3DS! After entering your card information when paying for goods or services online, you may be asked to provide another code. This is initiated after the merchant’s bank connects with the card issuer as the payment is processed. The purpose of the code is to check your identity; if you fail this check, the card issuer will not authorize the transaction even if you’ve correctly provided the card details.
The process of generating the code and it being entered, is carried out separately from the checkout and has nothing to do with the merchant. Once you have entered the code, the transaction will be authorized, and you can complete the purchase.
What is a 3-D Secure card?
If you’re wondering whether the cards you’re using are 3-D secure, it’s simple to check. If you must complete an additional authorization process during the payment checkout, your card is being protected by 3DS. The vital part of the 3DS process is the method of authentication is different from the card you’re using.
Card issuers will vary on the manner they use for 3DS, but all are equally valid. Some examples might include sending you an SMS with the code, or an email with the code. These codes are only valid for a limited time and cannot be re-used fraudulently at a later date. If your card issuer uses 3DS technology, you can’t opt out of the process.
What are the benefits of using 3-D Secure?
It’s fair to say that the 3-D Secure process does introduce a small amount of inconvenience because you’ll need to be able to access your email or mobile to retrieve a code. It can slow the checkout purchase down briefly, and you’ll be temporarily directed away from the merchant’s site. However, this minor inconvenience is well worth putting up with for the numerous benefits that 3DS offers.
The move to online payments and digital transactions has opened up opportunities but has increased the threat of fraud too. 3-D Secure is a powerful method of combating fraud, by adding a third layer of verification, independent of the card. What this means for you is that even if your card is stolen, the fraudster won’t be able to access your funds unless they’ve also managed to gain access to your phone and your email. This is a perfect example of why your phone and your email account should both be password protected, using unique passwords.
The 3DS process is tough for would-be fraudsters to crack and offers you infinitely more protection than previously available. If there are any disputed transactions, you won’t have to deal with the seller; instead, you’ll be referred straight to the card provider. No matter how helpful a seller is, trying to get a refund can be much more challenging than dealing with a card issuer directly. Moreover, not all sellers will want to be helpful if you’re claiming a transaction is fraudulent as without 3DS it could mean a loss of revenue!
When you use 3DS, the risk is reduced, and you have the reassurance of knowing that you can purchase items in confidence. This, combined with the smoother dispute process, makes the minor delay in authorizing the transaction more than worthwhile.
Merchant 3-D Secure Benefits
The benefits for customers using 3DS are clear, but it’s also beneficial for merchants too. No-one wants the hassle of having to deal with fraudulent transactions and 3DS reduces this possibility. If you’re a seller and don’t yet accept card payments, you’ll need to choose a payment gateway solution which incorporates 3DS technology.
It’s well worth taking the extra time to opt for a card provider that uses 3DS; some of the benefits include:
- Fewer contested transactions due to fraudulent activity
- 3DS checks mean you are no longer financially liable
- No unauthorized transaction chargebacks levied against your business
- Any queries over transactions referred to the card provider
- Greater confidence from customers that they can buy from you and remain protected
The introduction of 3DS technology offers considerable advantages to both buyers and sellers alike – the only people that lose out are the fraudsters! If you are interested in learning more about this innovative payment technology, reach out to Payment Savvy today! We are always on-hand to provide you with the information needed to make choosing your payment partner easy!