What is 3-D Secure and Its Advantages for eCommerce?

By 2028, the market is anticipated to be worth USD 1,303.5 million. With the rise in eCommerce and mobile commerce sales around the world, online scams such as stolen smart cards and fake repudiation are increasing day by day. Customers today want to be sure about their money going to a legitimate business. To avoid chargebacks, businesses need a mechanism to verify that their customers are authentic. The use of 3-D authentication technology for a secure payment gateway like Zaakpay is being driven mainly by this factor.

What is 3-D Secure?

3-D Secure, or 3-Domain structure, is an Ecommerce payment gateway protocol designed specifically to add a layer of security over online Credit and Debit Card transactions. It is put in place to avoid online fraud, protecting both the cardholder and the merchant. It is also known as Payer Authentication.

The goal of 3-D Secure Authentication is to add an extra step to the financial authorization process by verifying the cardholder’s identity.

Components of 3-D Secure Authentication

3-D Secure Authentication works on the basis of three domains, namely:

• Issuer Domain

The issuer domain is the financial institution that issues the card to the cardholder to use for making purchases of goods and/or services. The main elements of the issuer domain are given below.

• Cardholder Browser and related software: This software sends and receives messages between the MPI and the ACS.
• Enrolment Server: The enrolment server assists cardholders with initial authentication and administrative tasks.
• Access Control Server: The access control server verifies the validity of a card in card schemes and assists in the cardholder’s authentication.
• Validation Server: The validation server verifies the authenticity of a cardholder.

• Acquirer Domain

The acquirer domain is the bank that holds the merchant’s or seller’s bank account. The money for the goods/services offered by the merchant is deposited into this bank account. The main components of the acquirer domain are discussed below.

• Cardholder Authentication Messages: This plugin creates and handles cardholder authentication messages. After the cardholder completes the purchase, the plugin is activated.
• Signature Validation Server: This server verifies the digital signature on an order/purchase request that has already been authenticated. This server is available independently or as part of MPI.

• Interoperability Domain

The interoperability domain is in charge of deciding which network will be used. Visa, MasterCard, and RuPay are the most used networks. The following are the components of the interoperability domain:

• Directory Server: This server is used to make centralized decisions. If the specified account number is associated with the card and is part of a card scheme, the directory sends the request to the ACS for processing.
• The issuer of Certificates: It creates and distributes all certificates required for all domains. Card scheme certificates, SSL server certificates, public root hierarchy certificates, and the issuer’s digitally signed certificate are among these certificates.

How does a 3D Secure transaction work?

1. The customer starts the online transaction by entering his or her Debit or Credit Card information on the merchant’s website.
2. The payment gateway communicates with a directory server (VISA, MasterCard, or any other provider of 3-D Secure) to obtain information about the card’s authentication message.
3. The customer is redirected to the 3DS website, where he or she must verify themselves by inputting the OTP.
4. The 3DS answer is sent to the payment gateway, where the acquirer institution verifies the transaction.
5. The consumer is alerted of transaction success or failure based on the transaction’s processing.

What is 3DS 2.0?

3D Secure 2.0 was launched to introduce new online transaction methods, improving the consumer experience substantially by making the checkout process smoother. In the year 2021, 71% customers using online payments were reported to be concerned about the security of their transactions regarding frauds due to the pandemic.

• Better at fraud detection: It makes online payment providers legally responsible for keeping fraud rates low by requiring nearly all payments to have two-factor authentication.
• Improved purchasing experience: As more people shop through apps, 3D Secure 2.0 enhances their shopping experience by swiftly and easily verifying app-based transactions. This improves the user experience directly on their mobile devices.
• Improved data sharing: It allows the issuing card bank to make better risk-related judgments by facilitating more personal data sharing between the issuer and merchant acquiring banks.
• Consumer-friendly identification: In riskier transactions, this new protocol allows customers more authentication alternatives, such as utilizing a biometric or one-time password. Also, customers can go through a single login step instead of a browser redirection process with 3D Secure 2.0.

Benefits of 3D Secure for eCommerce

• Increasing the trustworthiness of internet buyers: With the introduction of the 3DS high-quality, secure payment gateway like Zaakpay, the general public has realized how simple and secure it is to make online payments, resulting in a surge in online purchasing.
• Validation of debit card payments: Due to improved security, the RBI has validated online payments. As a result, the number of people who accept and make online payments has increased.
• Technology that is both advanced and reliable: 3DS eCommerce payment gateway is a successful and reliable solution that has significantly decreased online fraud while also increasing brand loyalty and client base.read more : newsmartzone
• Chargeback liability shift: 3DS also provides chargeback liability shift. This can be thought of as an extra layer of protection in which the merchant’s obligation for chargebacks is transferred to the cardholder’s bank.
• Provides additional layers of authentication for customers and merchants: Under 3DS, customers’ card information is protected by additional layers of authentication. Unlawful elements would find it more difficult to steal and use their Credit or Debit Card information.

In conclusion, 3D Secure payments protect your business from chargebacks and provide your customers with peace of mind. With a secure payment gateway like Zaakpay, you can simplify your digital payments. Zaakpay acts as your reliable 3D eCommerce payment gateway, ensuring to authenticate the shopper without the cardholder’s involvement in each transaction. This is a way of enabling frictionless payments, along with assisting you in preventing fraud and streamlining your digital payments.

Each transaction will be evaluated on the basis of the risk criteria such as consumer behavior, location, and contact information. To reduce fraud, any suspicious activity is directed through a 3D Secure challenge. Transactions with a high level of risk are scrutinized but not prohibited unless deemed necessary.