What You Need to Know About 3D Secure 2.0

Although 3D Secure technology has been around since 1999, it has struggled to pick up steam with card-not-present merchants, especially in the U.S. But with the launch last year of 3D Secure 2.0 and the merchant liability shift for this newer version set for April of 2019, this is all about to change. Not only does 3D Secure 2.0 take into account the latest payment platforms (like mobile apps) and reduce friction at checkout, it will also provide merchants with even more chargeback protection once the liability shift goes into effect. Keep reading to learn more about 3D Secure 2.0 and how it will be of benefit for merchants.

What is 3D Secure?

3D Secure is a security protocol that adds a layer of protection to card-not-present transactions by verifying the customer’s identity. The major card brands each have their own 3D Secure program, under names like Verified by Visa and MasterCard SecureCode.

With 3D Secure 1.0, cardholders are prompted to enter a password at checkout when prompted by participating retailers. The cardholder has to opt into 3D Secure 1.0 by enrolling with their issuing bank.

Why Has 3D Secure 1.0 Been Unpopular?

Despite offering added protection against fraud, many merchants have not taken advantage of 3D Secure 1.0 since it adds a step to the checkout process and is therefore likely to increase rates of shopping cart abandonment.

How 3D Secure 2.0 Changes This

3D Secure 2.0, which came out in 2017, exchanges a much greater amount of data between the cardholder, merchant and issuing bank in order to assess the risk and identify the customer. With a greater ability to verify the customer’s identity, the need for customer authentication is greatly reduced and the checkout experience is faster.

Even More Benefits of 3D Secure 2.0

In addition to speeding up checkout, 3D Secure 2.0 offers additional benefits to Merchants, such as:

1. Support for Recurring Payments

3D Secure now has special support for merchants that charge recurring payments/subscription services, which will lower the cost for merchants and reduce friction for customers.

2. Support for MOTO

3D Secure 1.0 only supported transactions that took place in web browsers. In contrast, 3D Secure 2.0 is compatible with a wide variety of card-not-present transactions, including mail or telephone orders.

3. Support for Mobile Apps/Mobile Payments

3D Secure 2.0 improves security for in-app, mobile, and digital wallet payments.

4. Advanced Authentication

In the case that the customer needs to confirm their identity, they will be able to benefit from advanced authentication methods that are faster than supplying a password, such as biometrics and facial recognition technology.

5. Greater Chargeback Protection for Merchants

Starting in April of 2019, merchants that use 3D Secure 2.0 will be protected from fraudulent chargebacks, whether or not the issuing bank has adopted the new technology.


Looking Ahead

Merchants have until April of 2019 to ensure that their 3D Secure solution supports the card brands’ rules for 3D Secure 2.0. If you’re ready to start benefiting from reduced fraud and chargebacks with card-not-present transactions, contact us today so we can help you get started with 3D Secure 2.0.