What is 3D Secure protocol?

3D Secure is a security protocol designed to provide an additional layer of security for online debit and credit card transactions. The name "3D" comes from "Three Domain Secure", due to the three domains involved in the security process: the Issuer Domain, the Acquirer Domain, and the Infrastructure Domain.

• Issuer Domain: This is the domain of the bank or financial institution that issues the credit or debit card to the cardholder. The issuer is responsible for authenticating the cardholder during a 3D Secure transaction.
• Acquirer Domain: This is the domain of the bank or financial institution that processes credit or debit card payments on behalf of the merchant. The acquirer is responsible for collecting the transaction details from the merchant and presenting them to the issuer for approval.
• Infrastructure Domain: This is the domain that connects the issuer and acquirer domains. It includes the infrastructure provided by major credit card networks (Verified by Visa for Visa cards, MasterCard SecureCode for MasterCard, American Express SafeKey for American Express) that enables secure communication and data transfer between the issuer and acquirer.

Together, these three domains allow a secure authentication process that verifies the identity of the cardholder and ensures that transaction details are transmitted securely and efficiently.

How does 3D Secure protocol work? 

3D Secure transactions add an extra step in the online payment process to enhance security. 

Here's how they work:

• Product selection: First, as a consumer, you select the products or services you want to purchase on a website and add them to your shopping cart.
• Checkout: Next, you go through the checkout or payment process. Here you provide your credit or debit card information as usual.
• Redirection: If the online merchant has 3D Secure enabled and your card also supports it, you will be redirected to your bank or card issuer's website. This redirection is automatic and you may see a brief message on your screen informing you that you are being redirected.
• Authentication: On the bank's website, you will be asked to authenticate yourself. Depending on your bank, this may involve entering a password you have previously set up with your bank, or it could be a unique code sent to your mobile phone via text message. This step is the core of 3D Secure, as it verifies that the person making the transaction is the legitimate cardholder.
• Transaction Approval: Once you have correctly provided the authentication information, you will be redirected back to the merchant's website. If the authentication was successful, the transaction will be approved and you will receive confirmation of your order.

The additional authentication process makes it much harder for fraudsters to fraudulently use stolen credit cards online, as they would need not only the card details, but also the authentication information.

Benefits of 3D Secure in e-Commerce

The 3D Secure protocol offers several key benefits to online merchants. Below are the most notable advantages:

• Fraud reduction: By requiring an additional layer of authentication, 3D Secure helps ensure that the person making the purchase is indeed the cardholder. This significantly reduces the risk of fraudulent transactions.
• Chargeback reduction: Related to the first point, by reducing fraud, 3D Secure can also decrease the number of chargebacks a merchant may receive. This results in significant savings and a more stable cash flow for the merchant.
• Greater customer trust: Customers feel more secure knowing that additional measures are being taken to protect their financial information. This trust can increase customer loyalty and lead to repeat sales.
• Compliance with regulations: In some regions, such as the European Union with its Revised Payment Services Directive (PSD2), strong customer authentication is required for certain transactions. The use of 3D Secure helps merchants comply with these regulations.
• Possible reduction in transaction fees: Some payment processors offer lower transaction rates for transactions that use 3D Secure, due to the lower risk associated with these transactions.
• Brand protection: By preventing fraud and increasing security, merchants protect their brand's reputation and position themselves as a safe and trustworthy option for online shoppers.