What is 3D Secure?

3D Secure - a security protocol used to authenticate online payments. This protocol adds an additional layer of security by requiring the cardholder to enter a unique code or password that is verified by the bank each time a transaction is made.

The purpose of 3D Secure is to reduce fraudulent transactions and chargebacks, which can be costly for merchants and banks. By requiring authentication from the cardholder, it makes it more difficult for fraudsters to use stolen credit cards or card information.

The name "3D" stands for three-domain model, which refers to three parties involved in the authentication process: the Issuer Domain (the bank that issued the card), the Acquirer Domain (the merchant's bank), and the Interoperability Domain (the infrastructure provided by card schemes).

How Does 3D Secure Work?

When you make an online purchase with a merchant who uses 3D Secure, after entering your payment details you will be redirected to your issuing bank's website. There you will enter your unique code or password (which may be sent via text message) before being redirected back to complete your purchase.

This adds an extra step in the payment process but provides greater peace of mind knowing that only authorized users have access to make purchases on their behalf.

Benefits of Using 3D Secure

In addition to reducing fraud and chargebacks, there are other benefits for both consumers and merchants when using schemes like Verified by Visa, Mastercard SecureCode, etc., which all fall under this umbrella term:

• Safer Transactions: Customers can rest assured that their financial information remains secure during transactions as they are required to input additional information to authenticate themselves.
• Higher Approval Rates: Merchants who use 3D Secure are less likely to experience payment declines as the fraud prevention measures in place reduce the risk of false positives.
• Better Chargeback Protection: By using 3D Secure, merchants have greater protection from chargebacks by providing evidence that a transaction was authenticated by the cardholder.

Conclusion

In conclusion, 3D Secure is a security protocol that provides an extra layer of protection for online transactions. Its benefits include safer transactions, higher approval rates and better chargeback protection. By requiring authentication from cardholders, it helps prevent fraudulent transactions and reduces financial losses for both merchants and banks.