The advantages and disadvantages of 3D Secure and the mysterious "invisible authentication" of payments

In today's digital society, consumers spend more and more time and money online. And this movement does not stop. And where large sums are spent, fraudsters inevitably appear. In response, merchants and financial services are forced to strengthen protection by adding new authentication steps. This, in turn, causes a negative response from payers who want to pay for purchases in one click and not be deceived. The circle is closed, but it can be broken with the help of 3-D Secure technology, which protects all transactions that pass through any gateway, including ours, at PayOnline .

According to the Global Payment Cards 2013-2019 study, the volume of payments by bank cards on the Internet is growing more actively than in other types of card transactions. Experts predict that by 2019 the number of card transactions on the web will reach 34 billion, and their turnover will be 3.9 trillion dollars. As the scale grows, the fraud problem becomes more acute: according to the European Central Bank, in 2015, 66% of all fraudulent bank card transactions were performed during operations without a card (present, or CNP) - that is, on the Internet.

Industry experts strive to be one step ahead of the attackers, updating standards and requirements to protect potentially sensitive payment technologies. To protect customer personal data, financial institutions set multiple levels of access and use additional customer authentication methods. And while preventive measures against fraud in the arsenal of financial institutions are becoming more active and aggressive, increased protection requirements can create a negative user experience and adversely affect their buying experience.

According to the Baymard Institute, 68.53% of online shopping baskets remain abandoned, that is, unpaid. There are several key reasons for the appearance of "abandoned baskets": the discrepancy between the final price originally stated, lower prices in another store, inconvenient delivery terms, and also - difficulty in the payment process. Payment by card online is considered more risky for a merchant than payment offline, due to the increased risk of return (the so-called chargeback). For this reason, “payment without a card” of goods and services on the Internet requires additional steps and input of additional information to confirm the user's identity.
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Many sites require registration using accounts in social networks, which discourage customers who are afraid of spam. And even if the customer has registered, the seller will require more information from him during the payment: delivery address, contact information, full payment details. Entering this data is inconvenient for the client, and with the growing popularity of shopping from mobile devices, the situation becomes even more complicated. When a user tries to log in from a smartphone to a site that is not optimized for a mobile device, he has many problems: his fingers do not hit the desired buttons, autocomplete does not work, leaving the answer fields do not appear. And even if the site is optimized for mobile devices, there is no certainty that the page with the payment form will also adjust to the screen size of the smartphone and allow you to enter the necessary data.

Studies conducted in the United States revealed that the number of abandoned baskets can exceed 50% due to 3D Secure authentication. In Russia, this problem is not so acute, since more than 80% of cards issued by Russian banks are subscribed to 3DS. While 3D Secure guarantees payers an increased level of security (due to the additional authentication step), they are often criticized for their inconvenience and negative impact on the conversion rate.

The risk of fraud is most critical for an online store, as it is a direct financial risk. Merchants strive to use 100% protection using 3D-Secure - this shifts responsibility from the business to the bank that issued the card in the event of a fraudulent transaction.

Unfortunately, the experience of using 3D-Secure technology can not always be called positive for the payer. Despite the proven dissatisfaction of users, which causes 3DS, VISA claims that their product increases the desire to make purchases online on those sites where this technology is presented and protects customers. And in this case, the question is more in informing and educating clients than in protecting them. In the UK, where 3DS is more common, buyers are accustomed to this procedure, and the negative effect on the payment conversion, respectively, is less noticeable than in other countries.

Visa and MasterCard plan to submit 3D Secure 2.0. Although the basic specifications have not yet been announced, it is planned that 3DS2 will refuse the format for requesting a unique confirmation code, a mysterious “invisible authentication” will take its place.

In modern realities, payment transactions without the presence of a card cannot be trouble-free due to the conflicting interests of the parties to the transaction. Consumers want to make secure payments without entering large amounts of data. Many companies are trying to reduce the number of steps towards successful payment, for example, regular customers are offered auto-fill fields, auto payments and payments in one click. Nevertheless, these methods still require making at least one purchase and registration on the site with the input of personal data. We hope that the introduction of 3D Secure 2.0 will help to make payment verification easy and painless for payers.

If this material was useful for you and you do not want to miss other interesting news in the future, subscribe to our blog, leave comments, and if you have a need to organize the reception of payments protected by 3-D Secure technology and the Anti fraud monitoring system, please contact to us, in PayOnline, in any way convenient for you, we will find you a suitable payment solution.