What is 3D Secure?
3D Secure is a security protocol designed to prevent fraud in online transactions. This protocol applies to transactions made with debit and credit cards.
3D Secure (or 3-D Secure) is a protocol developed in the early 2000s by Celo Communications AB (now developed by the Thales Group). To optimize the security of online payments and better protect consumers, this protocol was updated in 2017 (3DS2 or 3D Secure 2.0).
Before diving into these details, Micco stands as an all-in-one financial platform tailored for business creators, facilitating a comprehensive array of services. These include streamlined procedures for company registration, professional bank account establishment, capital deposit management, and more.
Micco's commitment to empowering business creators extends to:
- Effortless company registration processes
- Seamless professional bank account setup
- Convenient capital deposit management solutions
- A suite of additional financial tools and resources catered to entrepreneurs
With Micco, business creators can access a one-stop solution designed to streamline their financial operations and support their growth endeavors effectively.
Table of Contents
- What is 3D Secure?
- Definition of 3D Secure
- 3D Secure in E-commerce
- How 3D Secure Works
- Advantages of 3D Secure
- Disadvantages of 3D Secure
- Is 3D Secure Mandatory?
- Why Adopt 3D Secure?
1. What is 3D Secure?
3D Secure is a security protocol designed to prevent fraud in online transactions. This protocol applies to transactions made with debit and credit cards.
2. Definition of 3D Secure
The name 3D Secure comes from "3 Domain Secure." It is a security protocol aimed at preventing fraud during online transactions. This protocol is relevant for transactions made with bank cards, including:
- Card number
- Expiration date
- CVV code (security code)
These pieces of information are no longer sufficient on their own because any fraudster who acquires them can use them online repeatedly until your payment limit is reached. The 3D Secure protocol allows for more effective authentication of the cardholder, optimizing payment security.
Some payment companies, primarily Visa and MasterCard, offer this service. Visa calls it "Verified by Visa," while MasterCard refers to it as "MasterCard SecureCode." Both companies jointly developed 3D Secure, which is now one of the most modern and widespread methods of preventing online payment fraud.
The authentication process involves three parties, hence the name "3 Domain Secure":
- Acquirer Domain: Refers to the merchant and their bank receiving the funds.
- Issuer Domain: Refers to the bank that issued the payment card.
- Interoperability Domain: Refers to the card network system.
3. 3D Secure in E-commerce
The 3D Secure protocol employs various technologies that benefit online store owners and other professionals. By implementing this protocol, the heavy burden of fraud prevention in e-commerce is no longer on the merchant.
However, this can also be a problem because the responsibility falls entirely on the payment provider, limiting the information available. The transaction and customer identity are verified by a system that uses a large amount of data to determine whether a payment is fraudulent.
E-commerce merchants seek to provide a smooth shopping experience for their customers. 3D Secure can lengthen the payment and cart validation process. In 2017, only 50% of merchants had enabled this system on their online stores, fearing it would impact conversion rates and cause cart abandonment due to a less ergonomic experience.
When a customer makes a purchase with a bank card, they are automatically prompted to undergo strong authentication via this protocol. Online sellers can implement this security feature through payment solutions such as:
- Ingenico ePayments
- Mollie
- SecurionPay
- HiPay
- And many others
4. How 3D Secure Works
During a purchase, the 3D Secure protocol works in the background, collecting the necessary information and transferring it between the online store and the consumer's card issuer. This information includes the customer's purchase history and data used to verify their identity (such as the device they use and their buying habits). The more information provided, the more secure the identification process.
A specially designed algorithm can certify with minimal error (though there are always vulnerabilities) that the consumer making the purchase at that moment is the cardholder. This information is directly transmitted by the online store to the card issuer, ensuring the buyer faces no issues.
Currently, only purchases made on online stores that have adopted this service provided by Visa and MasterCard are likely to be validated by a one-time security code. Merchants using this system typically display reassurance logos like "Verified by Visa," "MasterCard SecureCode," and "American Express SafeKey."
The identity verification system can take several forms. The most common method is sending a code via SMS to be entered on the e-commerce site. Other methods include:
- A password chosen by the user
- The user's date of birth
- An electronic device
5. Advantages of 3D Secure
- It sets you apart from competitors who do not offer this type of payment.
- Merchants can more easily gain consumer trust, as they know their purchase is secure.
- Fraud is significantly reduced, leading to fewer chargebacks.
- It may not incur additional costs. Depending on your platform choice, the protocol may be included in the offered services.
- Responsibility is transferred to the banks themselves.
6. Disadvantages of 3D Secure
- The protocol is not offered by all payment card issuers. The most well-known providers are Visa, MasterCard, and American Express. However, almost all cards now automatically offer 3DS.
- The verification process can be lengthy, potentially lowering conversion rates by extending the shopping experience and adding a new step to the checkout process.
7. Is 3D Secure Mandatory?
No, 3D Secure is not mandatory, but it is strongly recommended. A confident consumer can quickly become a loyal customer. In the short term, this solution may seem burdensome and unnecessary, but in the long term, the advantages are evident.
As a merchant, you don't want your competitors to gain an edge over you with this type of differentiation. You need to stay up-to-date and prevent your visitors from turning to their sites.
Although requiring identity verification might cause some impulsive purchases to be missed, the benefits far outweigh the inherent disadvantages of this protocol. 3D Secure prevents many fraud-related issues that not only result in direct revenue loss but also damage your company's reputation among consumers.
8. Why Adopt 3D Secure?
This security protocol should be integrated into your online store. While 3D Secure has some minor drawbacks, they are not significant enough to handicap an e-commerce site, especially considering the benefits it provides.
According to Statista, the number of credit card fraud cases in France exceeds 55,000, with the amount of credit card fraud reaching 473 million euros in 2020. Adopting 3D Secure can significantly reduce these risks.
As a financial services company, Micco provides comparable services and solutions tailored to the needs of modern businesses. With a user-friendly platform, competitive pricing, and a commitment to customer satisfaction, Micco is a viable option worth exploring.
Whether you're a freelancer, startup, or established enterprise, Micco offers the tools and support needed to streamline financial operations and drive business growth. Check out Micco today to discover how it can complement your business banking needs.
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