3D Secure Protection: A Guide for Merchants

According to the Federal Trade Commission, credit card fraud is the most common type of identity theft. And research shows that 38.6 percent of all credit card losses occur in the US. In 2018, these losses added up to a staggering 9.47 billion USD for merchants nationwide.

Like a storefront or online merchant, the good news is that you can protect yourself against credit card fraud. In addition, implement 3D Secure technology in your payment processing system. In this article, we’ll discuss precisely what 3D Secure is, how it works, and how it can protect your business.

And when it comes to protecting your business, Zenti can help you get the high-risk merchant account services you need, even if you have a history of being denied. With Zenti, you’ll be able to offer your customers the full roster of payment options, including all major and debit cards, plus a mobile app, e-check, and online payment methods, at affordable rates.

What is 3D Secure?

3D Secure (also known as 3DS) is a payment security protocol used by payment processors to prevent fraud in online credit and debit card transactions. The name stands for “3-domain structure” because the system involves a three-part process of payer authentication. Each step of the credit card authorization process helps ensure an extra layer of protection to help mitigate fraud and scams.

VISA and Mastercard initially developed 3D Secure authentication to provide additional payment security for their cardholders. VISA created this process and then later licensed it to Mastercard. Essentially, the service is the same for both credit card companies, although they may brand it differently.

Both VISA and Mastercard refer to their systems as EMV® 3-D Secure. However, each credit card issuer also offers specific proprietary tools within those systems. For example, VISA offers VISA Secure, while Mastercard refers to its design as MasterCard SecureCode.

Likewise, American Express uses its proprietary brand, American Express SafeKey®, which also relies upon standard EMV® 3-D Secure technology. The essential tools and results are essentially the same for all these credit card companies. And when it comes to authorization, debit and credit cards are both protected equally with these protocols.

Why is 3D Secure so Important?

For online shopping, 3D Secure is especially vital because it provides valuable credit card authorization in all types of card-not-present transactions. Card-not-present (CNP) refers to sales where the payment is made remotely, such as in eCommerce sales with online prices, where both the cardholder and the credit card aren’t physically present at a merchant location.

Unfortunately, CNP transactions are a primary source of credit card fraud worldwide. In 2020, a study from LexisNexis Risk Solutions showed that CNP caused a staggering 44 percent of US merchant sales losses. And with online sales more popular than ever, CNP fraud numbers would skyrocket if online merchants didn’t have payment security protocols to prevent this scam.

How Does 3D Secure Work?

3D Secure operates by providing additional authentication steps during checkout. These extra credit card authorization layers help further validate the cardholder’s identity. 3D Secure verifies everything in seconds, so there’s no waiting time and no negative user experience for the customer. VISA has a convenient video on its website that demonstrates the process.

At the core of this authentication process is a unique identifier provided by the cardholder. Authentication could be in the form of a password, an SMS code, or a temporary PIN. This secure authentication method validates the cardholder’s identity and dramatically mitigates the risks of credit card fraud or identity theft for online merchants and customers. Likewise, with this additional customer authorization, chargebacks on debit and credit cards are also reduced.

How to Make a 3D Secure Transaction

Here are the basic steps of a 3D Secure transaction:

1. The customer enters their credit or debit card data.

2. The 3D Secure enrollment confirmation checks card registration for 3D Secure protection.

3. If the card is registered, the customer is redirected on the screen to the 3D Secure authentication page provided by the card issuer.

4. When the page appears, the customer is asked for their password (which they set up with their bank) or a one-time SMS code or PIN.

5. Once customers enter their unique password, code, or PIN, the screen redirects them to the merchant’s checkout page for payment confirmation.

6. After being redirected to the merchant’s site, the confirmation regarding payment acceptance will pop up.

As a strong customer authentication (SCA) protocol, 3D Secure provides a highly effective layer of extra protection for every in-person or online transaction. And with this type of authorization, debit and credit cards are processed so quickly that customers won’t even notice the time it takes to validate their card.

If customer satisfaction and retention are essential, Zenti can help you get approved for various payment methods. These payment methods would include all major credit card and online payment options. Zenti can provide additional solutions regarding high-risk merchant accounts. By offering more payment options, you can reach more customers and gain excellent customer retention for your business.

Which Version of 3D Secure is Being used?

3D Secure supports four credit card brands worldwide: VISA, Mastercard, American Express, and JCB (Japan Credit Bureau). These credit card companies are now using the new-and-enhanced 2.2 version of 3D Secure. This latest-generation model requires strong customer authentication (SCA) like its predecessors and gives customers more control over each transaction.

For example, one of the new components of 3D Secure 2.2 is something called “whitelisting” — a personal list of the most-trusted merchants that customers can create. With allowing listing, a customer can choose to eliminate the SCA prompts while making transactions with these favorite merchants. As with passwords and codes, this personal whitelist won’t be accessed by thieves or scammers, so it doesn’t pose any added risks to the merchant.

Likewise, another improvement is Requester-Initiated Payments (3RI). 3RI enables merchants to initiate transactions on their own. 3RI is incredibly convenient for online merchants who offer subscription-based services or situations involving weekly or monthly payments. With 3RI, merchants can safely initiate the cost themselves, even if the customer is currently offline.

Benefits of 3D Secure

Here’s why 3D Secure is so popular with financial institutions, credit card companies, consumers, and merchants:

It’s Easy to use

3D Secure is extremely easy for customers. They must respond to a couple of user-friendly prompts from the terminal or card reader. And best of all, secure authentication only takes seconds, so customers don’t have to wait for the transaction to finish.

The Authentication Code is Unique to the Customer

3D Secure relies upon unique passwords, PINs, or one-time-use codes created by and known only to the cardholder.

It Decreases the Risk of Fraud During CNP Transactions

Codes and passwords will not be stored in the system with 3D secure, so the private data can’t be accessed by criminals, even if scammers hack into the merchant’s eCommerce site.

It Provides Chargeback Liability

Suppose a fraudulent chargeback is authenticated and accepted via 3D Secure. In that case, the liability for that transaction will probably be transferred to the financial institute or payment processor providing the credit card. As a merchant, you won’t be held liable for the chargeback.

It Increases Customer Loyalty and Satisfaction

Customer satisfaction plays a huge factor in the success of an online store. If things don’t go smoothly, or if a payment transaction has security glitches, there’s a good chance that the customer won’t return. Studies show that 62 percent of customers won’t continue business with an online store if they’ve experienced a failed transaction.

3D Secure mitigates the risks of these security issues. Plus, it processes information at lightning-fast speeds, so customers won’t be left waiting for their transaction to complete. With 3D Secure, you and your customers can feel safe with every transaction via phone or the internet.

Zenti can help you get the secure payment processing you need for your high-risk merchant account if you want peace of mind with safe transactions. Zenti only works with Payment Card Industry (PCI) compliant processors, so you can rest assured that every transaction is conducted with the highest level of security protocols in place. Plus, Zenti offers tracking from the moment of the sale through its completion, so you’ll know exactly when the payment is safely in your merchant account where it belongs.

3D Secure FAQs

How do you Enable 3D Secure?

Depending on your bank, credit card company, and the card issuer, 3D Secure may already be activated on your VISA, Mastercard, or American Express card. To enable it, you’ll need to log in to your banking profile, go into the “My Cards” tab, choose the card you want to activate, and follow the prompts for activation.

Are There Merchant Fees for 3D Secure?

For each 3D Secure transaction, merchants pay a flat fee. Additionally, VISA and Mastercard might impose a fee as well. These fees can typically run between 20 cents and 30 cents (US) per transaction. However, these rates can vary according to the card network and the payment processor you use. Also, the more 3DS transactions you process, your rates might be cheaper.

Is 3D Secure Mandatory?

As of the first quarter of 2022, 3D 2.0 is only mandatory for credit cards in European nations. It hasn’t yet become mandatory in other regions of the world.

Tips for Safe, Secure CNP Transactions

Even with 3D Secure technology, staying proactive with all your transactions is essential. And if you have an eCommerce store or conduct many CNP transactions, it’s even more crucial to implement safe practices at all times. These CNP safety tips can help mitigate risks and protect your business from fraud:

Get The Cardholder’s Address

Surprisingly, 61 percent of merchants (or their employees) will accept a transaction even if the purchase doesn’t provide a verified billing address. With a CNP transaction, this could be a recipe for disaster. Always take down the customer’s full name, billing address, and contact information, including phone numbers and email addresses. When billing and shipping addresses don’t match, this can be a significant red flag for fraud.

Get the Correct Credit Card Information

When taking a CNP transaction, you’ll want to get all the necessary credit card data, including the customer’s name as it appears on the card, the type of card, the account number, and the expiration date. If you have an eCommerce site, your checkout page should prompt the customer for this information. However, if you’re doing a transaction by phone, take down names and numbers correctly. Also, check the expiration date to make sure it hasn’t expired. Typos and expired card numbers are prime reasons for declining credit card transactions.

Make Sure to Check the CVV Number

A card verification value (CVV) code consists of three or four digits printed on the back of a credit card. This security code proves that a purchaser has the physical card in hand when making an online or telephone purchase. Since CVV codes can’t be stored or transferred, it’s difficult for scammers to access them unless they’ve stolen the physical card and have it in their hands.

By using 3D Secure in all your transactions, you can rest assured that you’re using a safe, sophisticated security protocol system that will reliably authenticate payment cards. With 3D Secure, your customers’ privacy and sales will be protected from scams and identity fraud.

If you’re ready to improve sales and boost revenues, Zenti can help. As a leading provider of payment processing services for high-risk merchant accounts, Zenti can help you get approved for the services you need to succeed, even if you’ve been denied approval in the past. With Zenti, you can contact:

1. Approved for all major credit cards, plus e-check, mobile app, and online payment methods.

2. Sophisticated tracking tools will monitor each transaction from its point of sale through completion.

3. Strategic solutions to streamline and manage monthly billing and invoicing.

4. Affordable rates, no matter what credit cards or payment methods are used.

Contact Zenti to find out how we can get you the payment processing services you need to boost sales, increase revenues, and retain customers.