3DS 2.0 Explained - How it works, features and benefits:- www.deekpay.com

What is 3DS 2.0, how does it work and what are its features and benefits?

As digitisation accelerates, securing cyberspace has become more important than ever. For businesses, it is imperative that the payment and receipt chain has the highest level of security. As a result, networks, banks and regulators in the payments ecosystem are constantly striving to improve security and build trust.

Until recently, we have been using the 3D Secure protocol to add an extra layer of security to online transactions to prevent unauthorised transactions.

Let's take a closer look at 3D Secure.

What is 3D Secure and how does it work?

3D Secure is a security protocol that includes processes, tools, and frameworks developed to enhance the security of online credit and debit card transactions.3D refers to three domains that interact with each other when using the protocol: the merchant or acquirer, the buyer or issuer, and the interoperability domain. Together, these domains validate the identity of the cardholder and ensure that the transaction is legitimate.

When a cardholder makes a purchase online, the 3D Secure protocol verifies his or her identity with a password or one-time code sent to his or her registered mobile phone number. This extra step helps to ensure that only the owner of the card is able to conduct the transaction.

The merchant then sends the transaction data to the issuing bank's domain, which validates the card details and checks that the transaction is within the cardholder's credit limit. If everything is in order, the issuer sends the authorisation code back to the merchant and the transaction is completed.

3D Secure has become the industry standard for online payment security and fraud protection, and is widely used by major card networks such as Visa, Mastercard and American Express. 3D Secure also allows businesses to reduce chargebacks and fraud and increase revenue by shifting the burden to the card issuer.

Where does 3DS 1.0 fall short?

3DS 1.0 is a popular fraud mitigation tool. However, this security protocol has some limitations stemming from -

Poor user experience: some users are unable to view the 3DS authentication page on their devices. Manually entering the OTP, PIN and password can be cumbersome.

Lower success rate: This is usually caused by an increase in the number of authentication steps.

Complex password management: it is not convenient to remember different passwords for each account.

Friction in the user experience leads to an increased likelihood of cart abandonment and failed transactions. That's bad news for any business. But there is a solution.

Launch of 3DS 2.0

3D Secure 2.0 is an updated version of the original 3D Secure protocol, providing a smoother, user-friendly experience. The new protocol was developed by EMVCo, a global organisation that promotes interoperability and acceptance of secure payment transactions.

Key features of 3DS 2.0

This includes modern authentication methods such as biometrics, one-time passwords and mobile authentication. This makes the checkout process both convenient and secure for the user.

The ability to collect additional transaction data such as device location, user location and merchant transaction history. This helps card issuers make more informed decisions when accepting or declining transactions, reducing risk while improving the user experience.

Improved risk-based authentication that allows card issuers to set risk thresholds for different types of transactions.

3DS 2.0 is the logical next step in the evolution of digital payments, with its popularity and the rapid growth of e-commerce. Businesses need to adopt the latest security protocols to protect customer data and provide a seamless, secure checkout experience. According to Visa, 3DS 2.0 has reduced -

Reduction in checkout time 85%

Shopping Cart Abandonment Rate Reduction 70%

3D Secure 2.0 authentication mechanism

Frictionless Processes

An authentication method that makes the checkout experience seamless and easy. It uses backend data analytics to assess the risk of a transaction. If the risk is low, the authentication process is automated without customer intervention. This means the customer does not need to enter another password or code to complete the transaction. The frictionless process is suitable for low-risk transactions and provides a smooth checkout experience.

Challenge Process

This method requires customer interaction to complete the transaction. The challenge process is triggered when preventing high-risk transaction fraud or when additional authentication is required. In this case, the customer is prompted to enter additional information to verify their identity, such as a one-time password sent to their mobile phone.

Uses PayU's powerful 3DS 2.0 SDK

PayU has launched its 3DS 2.0 Software Development Kit (SDK) - the industry's first EMVCo-certified 3DS 2.0 SDK. the solution is lightweight (less than 100KB) and easy for enterprise integration. Developers can find all the comprehensive integration guidelines here.

PayU's 3DS 2.0 SDK enables merchants to provide a secure and seamless checkout experience at all times. Click here to read the full 3DS 2.0 SDK Integration Guide.