Everything a Business Operator Should Know about 3D Secure

October 18, 2016 | Comment

What is 3-D Secure? For most people, when they hear that term, they tend to think it’s got something to do with 3D films or our three-dimensional world. They couldn’t be more farther from what the term really implies. 3D Secure is actually a kind of security protocol designed for online payments. It adds an extra layer of security, by way of authentication, to credit card, debit card, and other card transactions conducted over the Internet.

This particular authentication scheme is derived from a three-domain model, hence the 3-D moniker. The three domains associated with this model are as follows:


  • The acquirer domain, or the merchant and the bank that will receive payment.
  • The issuer domain. The bank or financial institution that issued the card.
  • The interoperability domain, or the service provided by the card company, MasterCard, American Express, Visa, and so on.

One would assume that any protocol, method, or technology that enhances business and costumer protection against online fraud and keeps online payments safe and secure would be a great thing. But believe it or not, there are still a number of businesses, and quite a few consumers, who don’t exactly know what to think of this new technology—authentication method—for online payments and credit card transactions.

3-D Secure from the Merchant’s Perspective

The 3-D Secure authentication protocol does not actually require that much investment, whether it’s time or money. Integrating this 21st century fraud prevention technology into an existing system is not time consuming, nor does it require hard work. An online retailer, or business owner, needs only to modify or incorporate an additional parameter to his or her already existing online payment scheme. For very little effort, what an e-merchant gets is extra security and an effective fraud prevention tool.

One of the most basic advantages to deploying 3-D Secure to your credit card payment structure is the fact that it can reduce fraudulent activities and unauthorized transaction chargeback. Keep in mind that it’s very easy to obtain a credit card number; it’s stamped, engraved, or embossed right on the card. But even if a delinquent individual gets hold of a customer’s credit card number, he or she won’t be able to use it for online transactions without the unique 3-D Secure pass code, which is known only to the cardholder and is not visible anywhere on the card itself.

And that is how you, the merchant, can avoid getting that dreadful unauthorized transaction chargeback.

3-D Secure from the Customer’s Perspective

Customers who are cardholders will need to register their cards so that they will be able to assign a unique password or pass code to their credit or debit card number. Once the card info is paired with a secure pass code, it is good to go. You can use the card to buy services and items over the Internet. But not all online retail websites have 3-D Secure integrated into their system. If you are worried about safety and security in using your credit card for online transactions, then you should only go for online retailers that have 3-D Secure activated in their payment structure.

You will know if the website has 3-D Secure enabled because you will typically see the name of the protocol on the payment page. If you are using Visa, then you should look for the Verified by Visa authentication protocol. If you’re holding a MasterCard, then the MasterCard SecureCode is what you should look for. And for American Express card holders, it’s the American Express SafeKey.

The checkout page is usually where a customer has to provide the appropriate credit card information in order to finalize the transaction. What usually happens when the payment scheme has 3-D Secure enabled is once the customer enters his or her credit card info, the system will automatically check if the card is registered for the 3-D Secure feature. If it is registered, or enrolled, the system will redirect the customer to an authentication page where he or she will be required to provide a verification key or password in order to complete the transaction.


As you can see, it’s not enough to have only the basic credit card information when conducting transactions in a 3-D Secure enabled system. You need to have the unique pass code in order to proceed with the purchase. Credit card fraud averted.

Common Pros and Cons of 3D Secure Technology

Just like everything else on planet Earth, there are certain advantages and disadvantages to this particular fraud prevention method.

The Pros:

  • Liability shift in favor of the merchant – More often than not, it’s the merchant who loses out when a cardholder tries to dispute a particular transaction. But since 3-D Secure is an authentication method that is initiated by the issuing bank or financial institution, meaning they are the ones who verify 3-D Secure passwords and transactions, the burden of responsibility now falls on them. This point alone should be enough for online retailers and businesses to consider deploying 3-D Secure into their card payment system.

  • Protection against false chargeback – When a customer files an unauthorized purchase claim, the merchant will be left paying for the item. With 3-D Secure, the merchant has chargeback protection against “friendly fraud” where a cardholder makes purchases online but then files a chargeback against the merchant, believing that the bank will favor their claim.

  • Build trust between merchants and customers – Due to the added security, customers are more likely to shop from your website than anywhere else because they know that they are safe from online fraud. And the more people who shop in your website, the more profit you will make. Shoppers are safe, your business is safe. Everyone wins.

The Cons:

  • Some customers don’t like the lengthy process – For someone who is used to the old way of making online purchases, the extra step required with the 3-D Secure feature can seem lengthy. And some customers just don’t have the patience for the added queries just to buy one item online.

Some customers don’t really understand the process – If something looks too complicated at first glance, this will typically put people off. They get asked to register their credit card number for the 3-D Secure service, and then every time they purchase something online, they get redirected to another page. To some people the process may seem unnecessary, especially if they don’t get its significance.