3D Secure
3D Secure (3DS) is an additional layer of security in online credit and debit card transactions. This protocol is designed to authenticate the identity during the payment process, reducing the risk of unauthorized transactions and fraud liability for merchants and . The process involves three key participants – a cardholder, a merchant, and an issuer. Once customers enter their card details, they are redirected to a page where they must verify their identity through methods such as a one-time password, a secure password, or biometrics.
3DS versions include 3DS1 and the newer 3D Secure 2.0.As 3DS1 is being deprecated, 3DS2 takes its place with enhanced risk-based evaluations. For transactions that require 3DS2 authentication, the card issuer determines the type of verification flow necessary.
There are two main flows:
- Frictionless flow: The customer’s identity is seamlessly confirmed in the background without needing any additional action on their part. It allows transactions to go through quickly and smoothly.
- Challenge flow: When a purchase seems high-risk or more verification is needed, the customer is prompted to provide extra information, such as a one-time password. This additional authentication step enables important transactions to be approved while still protecting against fraud. Customers may also be asked to complete a challenge flow when they have pre-approved future recurring payments to ensure continued authorization.
These flows allow issuers to decide when extra verification is needed, striking a balance between preventing and maintaining smooth customer payments. This intelligent approach significantly reduces chargebacks for merchants while protecting consumers from unauthorized transactions, making 3DS2 a win-win solution for all parties in the payment ecosystem.
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