3D Secure Authentication on Merchant Sites
3D Secure is a security mechanism available for card payments made over the internet. Through this system, cardholders can either validate an online transaction.
The 3D Secure Verification option of online transactions is most often automatically activated in the payment gateway for all merchants, and will be used by default for transactions initiated on the merchant’s website.
What is 3D Secure?
In short, 3D Secure is an anti-fraud system originally created by VISA (Verified by VISA) and subsequently implemented by MasterCard (MasterCard Secure Code). The system is based on an XML protocol that adds a higher degree of security to card payments over the internet.
What are the advantages of 3D Secure for Merchants?
The 3D Secure system assures merchants that a person who knows the data entered on a card can not trade online with that card unless it has access to the 3D Secure password, which is often received by SMS at the number telephone provided to the issuing bank by the cardholder.
One of the advantages of using 3D Secure on merchant sites is that their responsibility for payment validity is diminished in the event of fraudulent transactions.
Another advantage for traders is that the percentage of chargeback (reimbursement of funds by banks at the request of cardholders) for transactions signed with 3D Secure is lower than in the case of unsecured transactions through this mechanism.
It also increases the confidence of customers who, if they have activated the 3D Secure system for their card, then expects this check to appear when the transaction is completed.
In addition, many information websites, or even those of issuing banks, advise cardholders not to use their cards except on websites that offer 3D Secure as a mechanism to protect online transactions, so merchants who have this system available for online payments have an advantage.
How does 3D Secure work?
In short, the 3D secure system works as follows for cardholders:
- The cardholder inserts card data into the payment system (card number, expiration date, CVV / CVC code)
- The payment gateway checks if 3D Secure has been activated for that card
- If 3D Secure has been enabled then the user is redirected to the bank’s 3D Secure page
- The user enters the 3D Secure Authentication Code or Password on the issuing bank page
- The payment gateway receives the result of 3D Secure authentication from the issuing bank
- The payment gateway sends the card data and the result of 3D Secure authentication to the accepting bank
- The accepting bank authorizes or denies the payment as the case may be, and an information message is displayed to the user
Are all online transactions covered by 3D Secure?
In order for an online transaction to be covered by 3D Secure, the payment system needs this option enabled. In Romania payment processors provide security through 3D Secure, but there are international payment systems that use other anti-fraud mechanisms.
It also requires activation at the issuing bank of the 3D Secure system for the card with which the online transaction takes place. Activation of this system is free of charge and most of the time it is done at the bank when the card request is made or the card is raised by the cardholder. Activating 3D Secure for a card can also be done with the first use of that card for online payments.
It should also be mentioned that it is possible for a 3D Secure card to be active only for transactions larger than a certain limit (which can be discussed with the issuing bank), and therefore a small value transaction performed on a website with a card not to be subject to the 3D Secure system, while another higher value transaction with the same card on the same website falls under the scope of the 3D Secure System.
In conclusion, although there are voices saying that the 3D Secure Authentication step introduced in addition to the payment process can cause the user to abandon payment, at least for cardholders, this online payment security system is an advantage and a measure to give customers confidence in the payment method with the card they offer.