Today, consumers have more ways to pay than ever before. It is projected that there will be 20 billion connected devices making digital purchases within the next three years. Whether consumers purchase goods through a browser or mobile app, keeping these digital purchases secure is increasingly important and challenging. Industry research estimates that half of the digital commerce transactions declined due to suspected fraud were legitimate.
In 2001, Visa created a security measure for these purchases by launching 3D Secure to add another layer of protection for online card-not-present transactions. 3D Secure created an authentication data connection between digital merchants, payment networks, and financial institutions to analyze and share more information about transactions.
Customers were then asked to set a static password to authenticate transactions but their inability to remember their passwords on subsequent visits lead to increased shopping cart abandonment. This barrier resulted in a low adoption rate among merchants, who wanted to make purchases as easy and seamless as possible for their customers. Ultimately, this behavior put all transactions at risk for fraud.
Enter 3D Secure 2.0
Visa knew there had to be a better way to reduce shopping cart abandonment while improving the overall customer experience and security of the technology, according to Peter Caiazzi, Managing Director of TAS Group USA.
So they created 3D Secure 2.0, which enables a real-time, secure, information-sharing pipeline that merchants can use to send an unprecedented number of transaction attributes to an issuer. The issuer can use the attributes to authenticate customers more accurately without asking for a static password or slowing down business. In addition to online transactions, 3D Secure 2.0 works with wearables, in-app purchases and digital wallet transactions.
Benefits for Everyone Involved
3D Secure 2.0 will help each party involved in a transaction including merchants, acquirers, issuers and consumers. Less shopping cart abandonment, reduced checkout times, and smoother customer experiences are just a few of the many reasons why businesses should enable 3D Secure 2.0.
1. Merchants and Acquirers
3D Secure 2.0 improves efficiency and provides a seamless integrated customer experience which will allow for more opportunities for sales conversions. Reduced transaction costs, increased authorization rates, and the liability shift away from the merchants to the non-compliant issuing banks are major benefits of 3D Secure 2.0. It will also reduce false-positives from fraud-detecting software which will save merchants money. Other benefits that merchants and acquirers will see include:
- 10x more data through machine learning
- 70% less shopping cart abandonment
- Reduced checkout times by 85%
- 40% less fraudulent transactions
Issuers will also benefit because 3D Secure 2.0 should reduce customer service costs with 85% fewer inbound calls related to password resets. This will save issuers both time and money when performing these types of customer service functions. Also, 95% of transactions will be considered low risk and the approval times will be much faster and require less attention.
More forms of payments will be available to consumers who demand payment ease and convenience. In addition, more secure payment options will continue to build trust between merchants and consumers and that purchasing confidence can translate to more revenue. Ennio Ponzetto, Chief Revenue Officer of TAS Group USA, says that frictionless payments inherent in the 3D Secure 2.0 technology will mean less waiting time, fewer steps, and lower strain on customers – which will lead to a better overall customer experience.
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