What Is 3D Secure? Stepping up Online Transactional Security
By Janne Smith 6 minutes
Evolving from static passwords to 3D secure authentication, online payment systems have transformed for good. Currently, a population of 2.14 billion loves to shop online, and no, it’s not us; it’s Oberlo saying that.
Now that eCommerce has become an indispensable part of our lives, its convenience also comes with limitations. Although the brick-and-mortar days were good, technological evolution also catalyzed threats like online banking fraud. And the tech experts have been all heads to avoiding these crimes.
That’s where 3D secure steps in. Now, every online purchase lands you in an additional 2-factor authentication step. It verifies if you are making the purchase and not some black hat ordering popcorn carts.
In this article, we cover what is 3D secure authentication is, how it works, and ways you can activate the 3D secure system.
Note: Since the black hats love hacking data for monetary benefits, your banking information remains under a constant threat of being leaked out.
While several protocols now ensure enhanced security protection, a VPN like FastestVPN is still necessary! It conceals your IP address and disguises your server location as the original – making all your online activities untraceable.
What Is 3D Secure?
3D secure system is an authentication solution that ensures enhanced online transactional security. According to the Market Growth Reports 2022, the global market size for 3DS Authentication was approximately USD 477.47 million.
Projections suggest that by 2028, it is expected to surge to USD 1399.56 million, exhibiting a Compound Annual Growth Rate (CAGR) of 19.63% throughout the forecast period. This secure online payment service is accessible for Visa and MasterCard cards.
When focusing on its development, Visa mentions this protocol to cater to accelerating eCommerce demands where transactional frauds remains a primary user concern. The development of the Visa goes back a good 15 years. According to Visa, it introduced the initial 3-D Secure protocol to safeguard e-commerce transactions through an added layer of identity verification before authorization.
The 3-D Secure (3DS) system facilitates information sharing among the merchant, card issuer, and consumer when required. This process ensures owner authentication of the account legitimately initiates the transaction.
Who Invented 3D Secure?
The origin of 3DS system traces back to 2001 when Visa launched its security protocol, Verified By Visa, in response to the increasing prominence of eCommerce and virtual fraud. Initially designed to authenticate individual identities, its purpose remains unchanged today, albeit with technological advancements to counter evolving internet threats posed by malicious actors.
Recognizing the significance of 3DS, other major card issuers also embraced the technology, contributing to its standardization as it exists today. The 3DS system, under various names, is implemented by different card brands.
When brands started employing 3DS, then came with different names, such as:
|Verified by Visa
|American Express SafeKey
The Working of 3D Secure (3DS)
Here, we’ll explain the step-by-step working of the 3DS authentication:
- You head to the eCommerce site and enter the payment information.
- You’ll see a 3DS authentication page. You’ll be prompted to add your password or PIN (OTP).
- Your bank account and the eCommerce site exchange information, and your identity is verified.
- Your payment is either accepted or denied. In both conditions, you receive a notification.
What Are the Benefits of 3D Secure?
According to Fortune Business Insights, in 2022, the market size of global 3DS pay authentication was $1.05 billion and is anticipated to increase from $1.18 billion in 2023 to a rapid increase to $2.81 billion by 2030.
With an anticipated rise in the market value, here are the top advantages of 3DS:
1. Fraud and Chargeback Reduction
One of the primary advantages of 3Ds is its ability to effectively lower the risk of fraud and chargebacks for both – merchants and issuers.
2. Additional Authentication Step
By introducing an extra authentication layer during checkout, 3D Secure ensures that the cardholder’s identity is verified, preventing fraudsters from using stolen or counterfeit card details for unauthorized purchases.
3. Defense Against Chargebacks
In cases where a chargeback is initiated for a 3DS transaction, the additional authentication step is substantial evidence of the transaction’s legitimacy. This increases the likelihood that the issuer will support the merchant in chargeback disputes.
4. Financial Relief for Merchants
Implementing a 3DS system helps alleviate the financial burden of chargebacks on merchants by offering a more secure and authenticated transaction process.
5. Enhanced Fraud Detection
3D secure system aids issuers in accurately identifying fraudulent transactions, contributing to an improved overall security posture in the payment ecosystem.
What Are the Different Versions of 3D Secure?
There are 2 different versions of the 3DS system:
- 3D secure 1
- 3D secure 2
Let’s delve into the details of both the 3D secure versions:
3D Secure 1
This version was invented in 2001, where a user enters the card information to make an online purchase. Later, the user is redirected to a new authentication page where payment verification is required. And the redirection page is branded by the card network – making it look like a safe site. However, the drawbacks are there.
The Drawbacks of 3D Secure 1
- The users find the pop-ups to be untrustworthy
- A few bank networks require new passwords
3D Secure 2
3D Secure 2 was invented in 2016, where the networks aimed to comply with the latest EU requirements. These updated requirements included a patched version of the original version’s drawbacks.
Here, the authentication process allowed the network to send more data elements during the transactional process. Including the user’s shipping address and transaction history.
How to Activate 3D Secure Authentication?
While the 3DS technology ensures transactional security, we recommend using a banking VPN like FastestVPN for elevated security protection. Here’s how to activate 3D secure authentication:
3D Secure Authentication
- Banks automatically activate 3DS authentication.
- Shopping at an online store proves the 3DS activation.
- Your card’s 3DS activation is automatically recognized when shopping at a merchant.
One Time Password (OTP)
- When shopping online, you’ll be redirected to a new site.
- You’ll be asked for user authentication through the OTP.
- Enter the 3DS code and, as normal, complete the transaction.
- Your payment will be verified.
- Once validated, your transaction will be processed.
It protects financial security for online transactions, i.e., in merchant stores. A non-3D secure transaction is one that the 3DS doesn’t protect. It’s a standard transaction without the 3D secure activation. That’s not a problem. Your transaction will typically proceed.
FAQs - 3D Secure
What does 3D Secure do?
What is non-3D Secure?
What if my card is not 3D Secure?
It protects financial security for online transactions, i.e., in merchant stores.
A non-3D secure transaction is one that the 3DS doesn’t protect. It’s a standard transaction without the 3D secure activation.
That’s not a problem. Your transaction will typically proceed.
In conclusion, 3DS emerges as the cornerstone for secure online transactions. With a global market poised to reach USD 1399.56 million by 2028, its evolution from Verified by Visa to a standardized authentication process has reshaped digital commerce.
Beyond reducing fraud and chargebacks, it provides financial relief for merchants and enhances fraud detection. However, along with this transactional verification solution, we recommend using FastestVPN for elevated digital security protection.
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