Reducing the Risk of Fraud with 3D Secure 2.0

Reducing the Risk of Fraud with 3D Secure 2.0
It’s no secret that “ecommerce” has become more prevalent over the past decade. Consumers use credit and debit cards more than cash to make purchases and have also gotten more comfortable with the idea of online shopping. As a result, businesses across a wide variety of industries have found that accepting multiple credit cards, as well as giving customers the ability to shop and pay online, helps them to grow their customer base and increase sales.

Some merchants do not accept credit cards and others have been slow to embrace the idea of ecommerce payment processing, especially those with small, low-volume operations or cash-based businesses that rely solely on walk-in traffic. But when the COVID-19 pandemic hit in early 2020 and thousands of businesses literally had to close their doors to walk-in customers, merchants without the ability to accept credit cards online were suddenly faced with the very real possibility of going out of business because their customers had no alternative way to purchase their products. For these merchants, the ability to support online shopping and accept credit card payments as quickly and safely as possible became a necessity.


The Rise (and Risks) of Digital Transactions
Online shopping has become a normal part of daily life in most developed countries throughout the world. According to a study published by Statista, more than two billion consumers made online purchases during 2020 with online retail sales topping 4.2 trillion dollars. An article on the Visa Navigate website from July 2021 notes that there are over 500 million Apple Pay users, 207 million Netflix subscribers, and 200 million Amazon Prime members worldwide.

The downside to this spike in online activity is that as the number of digital transactions increases, so too does the risk of ecommerce credit card fraud. For merchants, protecting against the threat of fraudulent transactions becomes a top priority.


Fighting Fraud with 3D Secure 2.0
It’s a funny sounding name, but 3D Secure 2.0 (3DS2) technology provides merchants with a powerful ecommerce fraud prevention tool.


What is 3DS technology?
The “3D” in the name stands for “Three Domains Secure.” The three domains are the acquirer domain (the merchant and the bank to which the money is paid), the issuer domain (the bank that issued the customer’s payment card), and the interoperability domain (the infrastructure used by the card scheme to enforce 3DS protocol).

The current version, 3DS2, is an industry authentication protocol developed by EMVCo ( that adds a layer of protection to card-not-present (CNP) transactions by verifying the customer’s identity through strong, two-factor authentication, thereby enhancing security for online card payments. EMVCo was formed in 1999 to support technology that enables card-based payment products to work together seamlessly and securely worldwide. The protocol supports a wide range of CNP, mobile wallet, and mail order/telephone order (MOTO) transactions with over 150 customer-specific and transaction-specific criteria to authenticate transactions. EMVCo is jointly owned by American Express, Discover JCB, Mastercard, UnionPay, and Visa.


How does 3DS2 work?
The technology works by running code on the shopping checkout page of a merchant’s website.

When a customer makes a purchase using their laptop or mobile device, they enter their billing, shipping, and credit card details into the payment checkout form. The merchant’s 3DS2 service provider then sends that information—combined with data such as the customer’s device ID, previous transactions, and other cardholder information—to the bank that issued the customer’s card along with a request to validate the transaction.

The 3DS2 financial fraud detection tool then assesses the risk level of the transaction; if it’s considered high risk, the customer is prompted to verify their identity using a process such as biometrics. If the transaction is considered low risk, card is validated and the transaction is approved and considered “3D Secure Verified.”

This process enables customers to authenticate their identity without having to enter additional information and makes for a smooth, hassle-free checkout experience.


How 3DS2 Benefits Merchants
The 3DS2 anti-fraud solution provides a number of benefits to merchants.

  • 3DS2 technology enables merchants to provide their customers with an enhanced user experience in-app and across devices.
  • Merchants can create customized transaction rules to capture the type of data that’s most important to them.
  • For most transactions, the risk-based authentication process enables issuers to authenticate cardholders without having to ask for additional information.
  • The extra layer of security reduces fraud by verifying that the customer is legitimate.
  • 3DS2 offers merchants “liability shift” chargeback protection. If an authenticated transaction is charged back due to fraud, the liability for the chargeback shifts from the merchant’s bank to the cardholder’s bank (the issuer).


How 3DS2 Benefits Customers
3DS2 technology also provides benefits for customers.

  • 3DS2 technology captures cardholder and transaction data based on criteria set by the merchant, making the checkout process faster and less intrusive for the customer.
  • Customers are less likely to experience false declines.
  • By eliminating annoying “challenge” questions, customers are less likely to abandon their carts and follow through with purchases.
  • Customers have a seamless online purchasing experience regardless of the type of device they use.


Win the Fight Against Fraud
Implementing 3DS2 technology can help your business to optimize the payment flow, reduce the risk of chargebacks due to fraud, and give your customers a fast, frictionless checkout experience. When you partner with Cartis Payments as your merchant service provider you can be confident that you will have the best fraud prevention tools available to protect your business from fraudulent transactions.

Call today to learn how we can benefit your business.