With e-commerce fraud continuing to rise, the entire e-commerce payment chain is always looking for ways to increase the security of online transactions.
Enter 3D Secure (3DS), a global standard that’s being promoted as a simple way to confirm consumer identities, decrease the risk of fraudsters using cards for online purchases and reduce the risk of chargebacks.
To complete the checkout process on a participating 3DS site, customers simply provide a previously established password through the issuing bank’s website. It’s a second layer of identity verification that’s designed to protect businesses, cardholders and issuing banks against fraud.
And while it sounds simple enough, 3DS implementation hasn’t always gone as smoothly as merchants would hope. Here are some of the biggest 3DS authentication failures and how merchants can avoid them.
While 3DS was designed to make transactions more secure by implementing a second layer of authentication, the system doesn’t always work like it’s supposed to, leaving merchants with complaints like these.
3DS — commonly referred to as “Verified by Visa” or “Mastercard SecureCode” — is routinely on the receiving end of complaints and has been blamed for merchants experiencing a drop in conversions. A similar solution implemented in India resulted in an overnight 25% drop in sales post-implementation, so the correlation is not out of the realm of possibility.
Some merchants who sell products internationally have found a significant increase in orders being rejected following the implementation of 3DS 2.0. The culprit: special characters. Many customers were using special characters — like Ü or ä — in their customer details, and the system doesn’t accept them.
If a customer has a pop-up blocker installed on their browsers, those blockers can restrict the 3DS page from opening and letting the customer complete their payment. Merchants will need to let customers know that they may need to disable all pop-up blockers before making a purchase.
Other customers might encounter friction during checkout if the card-issuing bank isn’t enrolled in or participating in the 3DS verification program. Merchants must also understand that 3DS isn’t compatible with every credit card, such as with prepaid credit cards that don’t require registration.
As some customers are checking out, they may realize they don’t have access to the mobile phone to which the SMS code is being sent. And if they can’t get the code, they can’t make the purchase.
Customers might be suspicious the first time they encounter the 3DS authentication page. Many worry that it’s a security threat perpetrated by fraudsters, causing them to abandon their purchase.
While Visa first introduced the 3DS concept in 2001, smartphones didn’t come around until a few years later. The result: incompatible interfaces, distorted images and slow load times that make purchases challenging and can result in lower conversion rates.
For merchants looking to add layers of authentication to comply with new rules and regulations, 3DS might seem like an easy-to-add solution. But here are two things merchants should consider before they implement 3DS.
E-commerce merchants should research 3DS vendors to ensure their solutions are compatible with their platforms and provide the transactional data that can help improve conversions and prevent fraud, like the percentage of orders that were protected via 3DS.
Merchants may want to think about eliminating 3DS authentication requirements for transactions in which the conversion risk outweighs the benefit. Retailers can establish rules that account for the country from which the order originates, the payment method being used and the amount of the transactions. Orders that are deemed to be low-risk based on these and other factors may be able to bypass the authentication process and increase the chances they’ll result in a successful transaction.
While 3DS may be a solid tool in a merchant’s arsenal to protect against fraud and chargebacks, it shouldn’t be your only tool. To learn more about other ways to protect your business and your profits — including ClearSale’s Total Guaranteed Protection Solution, talk with one of our fraud analysts. Email us at contact@clear.sale to get started today.