What is a 3D Secure Payment: How This Anti-Fraud Feature Protects Businesses

The boom of online sales in recent years has been hugely beneficial to consumers and businesses alike. But this success also drew the attention of fraudsters who prey on consumers. In this article, we will explain in simple terms what 3D Secure payment is, and how it’s helping to prevent online credit card fraud.

Credit card fraud is a worldwide issue that is costing honest consumers enormous Research by Shift Processing found that $24.26 billion was lost due to payment card fraud worldwide in 2018 and that credit card fraud accounted for 35.4% of all identity theft fraud. Card-not-present fraud is especially pervasive — so much so that it counts for 79% of total credit card fraud in Europe.

For these reasons, implementing technology like 3D Secure has become essential. This security protocol protects consumers from identity theft and businesses against chargebacks while helping to maintain a healthy and trustworthy relationship between the two parties.

Today, any business looking to offer online goods and services for the first time or seeking digital transformation to existing online business models can and should consider the importance of 3D Secure payment features. This includes a wide array of industries, from food delivery apps to homegrown legal firms to ridesharing apps.

Having an online payment system that is secure both for the business and the customers is now a prerequisite for sustainable growth. Only once an online shop is up and running securely can the rest of the organization’s digitization be built atop it.

Likewise, companies that have already embraced digital business can’t afford to have an insecure payment system online. Being exposed to credit card fraud can make customer relations turn sour fast.

Before we go further into how the 3D Secure works, let’s first review what it is and how it can positively impact businesses.

What is 3D Secure payment?

3D Secure is a security protocol that aims to protect consumers and prevent fraud from online credit and debit card payments. The measure, authorized by the payer, gives customers an additional protective step when making online payments to prevent other people from making payments.

The “3D” refers to the three domains involved in the process:

The issuer (the bank which issues the customer’s card)
The acquirer (the merchant receiving the money and their bank)
The interoperability domain (the online infrastructure supporting 3D Secure)

If you’re buying something online, 3D Secure works by redirecting you from the shop’s website to the website of your bank or credit/debit card provider. You confirm your identity, usually by providing a password or entering a one-time authentication code sent to your phone. If the correct details are given, you are then redirected to the original website to complete the transaction.

3D Secure comes with a number of benefits for both the business and the customer. Namely, this:

Helps to protect the customer’s credit or debit card being used for online fraud.
Makes online payments quick and simple for the customer without sacrificing security.
Legitimizes business payment systems in the eyes of customers.
Prevents chargebacks when a customer’s card has been used by a third party.
Protects your business from being liable if fraud between the customer’s card and your business has taken place.

Which credit card providers use 3D Secure?

The 3D Secure protocol was created in 2001 by Visa in partnership with Arcot Systems (Now Broadcom’s CA Technologies). It is currently implemented by major card providers as:

3D Secure is also available for mobile payment systems. Google Pay, Apple Pay, Samsung Pay, and others also support the use of 3D Secure for customers making purchases through smartphone apps.

How does 3D Secure work?

We won’t go into technical details of how the technology works in this particular article. Rather, here is a simple breakdown of how 3D Secure works, with the steps the average business seeking to implement a secure digital transformation needs to know:

The customer starts the online transaction by entering their credit card information to your website.
The directory server is contacted and confirms that the card is registered.
The customer is redirected to the 3D Secure page created by their bank.
On this page, the customer adds the security details, be it the password or the code sent to their phone.
The data is then sent to the directory server, which provides the details to the merchant’s bank.
Once the payment is confirmed and authorized by the merchant’s bank, the customer is shown the result of the transaction.

Assuming all has gone correctly, the transaction is now complete. The merchant will receive the money and the customer should expect the product or service.

If the required code is not provided, then 3D Secure does not allow the transaction to complete — even if all other details are correct.

When multiple payments fail in this way, then the process will be flagged and 3D Secure may lock down the card for online payments entirely. This is to protect the actual card owner from future fraud and can be resolved by contacting the bank.

How does 3D Secure affect you?

As a consumer, 3D Secure helps you by making it much harder for someone to commit credit card identity theft against you. It means that, even if someone gets hold of your credit or debit card information, they won’t be able to use your money without your password or your phone.

For businesses, employing 3D Secure makes your customers feel more at ease in a world of increasing worry over credit-card fraud. When customers come to your website, having them go through security measures, that makes their experience more positive and your business more competent.

This is especially important when selling to international customers. If you don’t have a physical location in the customer’s country, they may feel uneasy about purchasing from your site, since they’ll be left without recourse if something goes wrong. By using 3D Secure, you can start to grow your business internationally with a customer base that is confident in paying through your website.

Finally, 3D Secure means the liability for payment authentication is removed from your business and placed on the credit card payment provider. So, if credit card fraud does take place and your business is involved, you’ll be protected against unauthorized transaction chargebacks.

Why is using 3D Secure important today?

Credit card fraud is incredibly pervasive in today’s online world — costing €1.8 billion within SEPA nations in 2016 — and the damage it can cause consumers and businesses is staggering.

That’s why businesses are taking steps to protect themselves and their customers against it. By integrating measures like 3D Secure for their online transactions and adopting POS card terminals with 3D Secure features for their brick-and-mortar stores, identity theft can be kept at bay without making shopping a hassle for their customers.

How to add 3D Secure to your website

Now that you know what 3D Secure is and how important it is to protect your business and customers from fraud, let’s take a look at how you can implement it on your site in just a few minutes.

With viva.com checkout systems, 3D Secure is offered to you from the get-go, as well as essential features like plugin integration, setup for recurring transactions, and payment notifications — all with 0% acceptance fees.

viva.com provides 3D Secure measures for payments from all types of sources. So whether customers are using a credit card, Apple Pay, Google Pay, or one of many other third-party wallets, you will stay protected.

Check out our e-commerce solutions to find which one works best for your business.