A technology known as 3-D Secure is intended to provide an additional degree of protection for online credit and debit card transactions. There are "three domains" that interact with each other through the protocol, which are as follows: the merchant/acquirer domain, the issuer domain, and the interoperability domain.
When buying with a credit card, 3D Secure (3DS) requires clients to perform an additional verification step with the card issuer in order to provide additional fraud protection. Typically, you will take the consumer to an authentication page on their bank's website, where they will input a password connected with their card or a code provided to their phone, depending on the situation.
How does 3D Secure work?
Before proceeding with the purchase of an online service or product, clients will be required to complete a secure authentication step as an extra degree of protection. Before 3D Secure 2.0, buyers were sent to their bank's 3D Secure internet page, where they were required to input an extra security code or password (which was delivered to them automatically by text message to their phone number) in order to proceed with the payment process. The payment would be authorized by the issuing bank when the right code or password was entered, and the shopper would be sent to the merchant's website. The use of the 3D Secure technology provides an extra layer of safety for businesses against fraudulent payments.
Since its inception, 3D Secure (also known as EMV 3DS) has been improving security and increasing authorizations for digital transactions. A new protocol, 3DS 2.0 (also known as EMV 3DS), is now available that enhances security while also increasing authorizations for digital transactions. The European Union's Payment Services Directive 2 (PSD2) has brought about a number of developments in the area of online transaction security, including the requirement for European Union buyers to use a Strong Consumer Authentication component (SCA).
The new 2.0 version of the 3D Secure technology is required as part of the SCA requirements, and it represents an evolutionary step forward from its predecessor in that it allows the card issuer (bank) to use a broader range of data-points from the transaction to conduct a risk-based analysis than was previously possible. It allows a real-time, safe, and more accurate method of authenticating clients without the need for a static password or the need to slow down online transactions. For example, the card issuer will not send any further authentication requests to the cardholder for low-risk and low-value transactions (i.e., transactions with a value of less than 30 EUR). In contrast, for any other customer-initiated transactions, the cardholder will be required to complete 2-Factor Authentication (2FA), which can be accomplished using text messaging (SMS), app push notifications, or biometric techniques (fingerprint, etc.). Consequently, it is critical for a payment provider to handle not just the new 3D Secure 2 authentication flows, but also to appropriately apply exemptions for recurring payments, low-value transactions, low-risk transactions, and trusted beneficiaries in accordance with applicable regulations.
Is there a downside to 3DS?
Due to the fact that 3D Secure pop-ups might redirect you away from the payment site, some users may have difficulty determining whether or not they are authentic. Users frequently believe that these pages are phishing schemes. However, because 3D Secure only employs one-time codes, none of your other personal information should ever be compromised. When you authenticate yourself, 3DS adds a few seconds to the checkout process, but isn't keeping your information safe worth a few additional seconds?
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