Unfortunately, online identity fraud is a side effect of transacting online. The number of those affected isn't insignificant. Experian Information Solutions found that nearly 6.64% of the U.S. population was a victim of identity fraud.
To help prevent payment and identify fraud, merchants should consider 3D Secure, also called 3DS. 3DS is a security standard/protocol created by Visa and MasterCard. It adds a layer of protection added to online credit and debit card transactions.
3DS also refers to 3 Domain Server. That's because every 3DS transaction involves three parties:
- The Acquirer Domain
- The Issuer Domain
- The Interoperability Domain
There are six steps involved in a 3DS transaction:
- The customer enters in card info
- 3DS checks if a card is registered with the system
- If step 2 passes, the customer is redirected to a 3DS page for the merchant
- The customer types in their password or a one-time generated code
If step 4 passes, the customer is redirected back to the purchase page to complete the transaction
Successful payment confirmation is displayed
The Benefits of 3DS
The primary benefit of 3DS is payment fraud protection for customers and merchants. Additionally, the liability from fraudulent chargebacks shifts from the merchant to the issuing bank. Customers can claim that an unauthorized chargeback occurred. However, the credit card provider will be responsible for issuing any refunds. To get these benefits, merchants will need to ensure that the 3DS authentication step mentioned above is part of their payment transaction.
Embracing 3DS
3DS is not a requirement in the U.S. Because it is optional, many U.S. merchants have foregone implementing 3DS. From a global perspective, this is quite different, as Europe and India require 3DS integration. However, this shouldn't stop U.S. merchants from striving to implement 3DS immediately. Doing so can result in a drastic decrease in fraudulent payments.
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