3DS Archives – Page 7 of 14 – Forter

By Jeff Hallenbeck, Head of Payments

At Forter, we aim to help digital commerce companies build trust across the entire customer journey, including the payment process. If your job involves managing payment options and processes, you might consider 3D Secure (3DS) for authenticating card-not-present (CNP) transactions.

Perhaps your company already uses this protocol for authentication, but too many of your customers have experienced unwanted friction at checkout, causing them to abandon their transactions. Applying strong authentication doesn’t have to cause friction for every customer. In fact, 3DS has features that can benefit your customers and your business — but those benefits depend on how you apply the protocol.

Why Should You Consider Using 3DS?

If you apply 3DS to transactions intelligently, you can maximize its benefits, which include:

These benefits can help you achieve your business objectives — from reducing the number of chargeback claims and overall fraud costs to maximizing payment acceptance and expanding the business internationally. However, you must implement and apply the technology strategically to maximize 3DS’s benefits.

3DS Best Practices

You can get more out of 3DS if you follow these best practices:

1) Leverage 3DS to approve riskier transactions
Some companies use a blanket approach to 3DS, applying it to all payment transactions. This strategy introduces unwanted friction to every customer regardless of their identity and level of risk. Our Trust Premium Report research found that 77% of good consumers will abandon a purchase if the checkout experience is filled with friction.
We recommend that online platforms apply 3DS to high-risk transactions that warrant the need for additional authentication. This strategy allows you to provide a hassle-free experience for good customers while ensuring you can allow the most possible transactions through your conversion funnel without increasing fraud risk.

2) Implement a frictionless 3DS model for less risky transactions
When you apply 3DS to a payment transaction, the card-issuing bank decides whether the customer can proceed without additional authentication required. Every bank treats 3DS differently. Some banks prefer transactions that use 3DS, while others actively penalize transactions (via reduced authorization rates) that use it too heavily. Also, each issuer’s risk appetite varies, as does how they interpret the authentication data being sent to them by merchants.
Digital commerce companies should implement a frictionless 3DS model for less risky transactions. This model determines if a transaction should use frictionless authentication based on the card-issuer’s expected behavior, ensuring that authorization rates remain high while maximizing the amount of fraud liability shift that can be achieved. Your goal should be to learn which flows will balance risk and authorization rates, incorporating a smart and continuous testing strategy into your model. An effective model can help you maintain a seamless customer experience while driving down your exposure to fraud via liability shift.

3) Always consider the identity behind every transaction
Some online businesses wrongly assume that those who fail to complete a step-up verification flow are always fraudsters. However, many legitimate customers struggle when presented with step-up authentication, not understanding how it works and what they must do to complete verification. Consumers in the EEA have become accustomed to strong customer authentication. But despite its familiarity, an alarming 19%, 20%, and 25% of 3DS attempts fail in the U.K., Germany, and Italy, respectively .
Digital commerce companies should always consider a customer’s identity and past behavior when applying 3DS to a transaction. By examining their identity, they can deliver a more effortless payment experience while protecting the business from fraud.

The more payments professionals can tailor their approach to using 3DS, the greater their success will be in leveraging this potentially powerful tool to ensure an uplift in approvals and customer experience — without increasing the risk of false declines. To learn more about Forter’s intelligent approach to 3DS, click here.

Jeff Hallenbeck currently serves as the Global Head of Payments for Forter, where he is focused on building unique payment products and partnerships on behalf of Forter customers with a goal of connecting the right data points with issuing banks to maximize approvals and eliminate fraud from the ecosystem.