E-commerce fraud is far more prevalent than the vast majority of people realize. Despite the enormous interest traditional banks have in protecting the integrity and security of transactions, the fact remains that online hackers and fraudsters are engaged in a never-ending arms race against cyber security professionals. This means your data and your bank account are only as safe as the level of up-to-date protection you have at the ready at all times.
According to reports by Experian Information Studies and others, at least 6.6% of Americans are victims of online fraud and digital crime each year. Because traditional banking organizations and financial companies have an interest in maintaining trust, the number is likely much higher in reality than the number reflected by reported incidents.
The good news is that, because financial institutions have such a great interest in maintaining trust in their systems, quality cyber security products are constantly being released. Being as secure as possible requires leveraging the latest cyber security tools and technologies, and a new tool has been made available for online merchants and customers known as 3D Secure, or 3DS.
What is 3D Secure?
3D Secure is a collaborative project by MasterCard and Visa. The fact that the world’s two most prominent credit and payment processors would work together to produce 3D Secure shows how important it is.
3DS is a new technical standard that erects an additional layer of security for credit and debit card transactions completed online. All of the major card networks have developed their own versions of this technology with the Visa and MasterCard iterations bearing slightly different coding signatures for copy-write and branding purposes. When you work with a given credit processor, you will see the name of their version referred to by the name of the security tool followed by the processors’ name, such as in, 3D Secure Visa, 3D Secure MasterCard, 3D Secure Discover, and so on- although some smaller processors may use the 3DS of a larger processor if they have not produced their own.
3DS is an acronym for “Three Domain Server.” This name is derived from the three parties through which each and every transaction is run to completion. They are:
- The Acquisition Domain: This is the merchants’ bank accepting credit and debit payments.
- The Issuer Domain: This is the digital contribution of the organization which has issued the card being used for the transaction.
- The Interoperability Domain: This is one or more payment systems that act as a connection point between the Acquisition Domain and the Issuer Domain.
How 3D Secure Authorization Works
The literature on this tool says it adds one additional layer of security, which is true. But it is either a single, very robust layer, or it is actually three layers in one. These three layers are made up of the Acquisition, Issuer, and Interoperability domains described above. Each of these contain their own encryption and other security protocols, multiplying the additional security provided by 3DS almost exponentially.
To complete any online transaction, the cardholder provides proof of her or his identity by entering a unique pass code, a temporary PIN, or an SMS code. This engages a six-step process of verification and encryption.
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Step 1. Card Info Collection
The cardholder enters a unique credit/debit card code/info.
Step 2. 3D Secure Membership Confirmation
The system verifies that the card is registered with 3D Secure.
Step 3. Redirect to 3DS Secure Site
If enrollment is confirmed, the client is redirected to a 3D Secure page served by the provider.
Step 4. Duplicate Authentication
The client is then asked to enter a unique password or a one-time code which is to be emailed to a confirmed email address or sent to a confirmed phone number.
Step 5. Redirect to Merchant Site
If the authentication is successful, the cardholder is redirected back to the merchant’s website for confirmation of payment.
Step 6. Confirmation of Payment
Then, back on the merchant site, the customer receives a confirmation of successful payment.
This 3D Secure credit card or debit process contains at least double the number of security checks triggered by a transaction processed without 3D Secure. Some cyber security experts have compared it to the supremely secure process and system known as the Blockchain. In the Blockchain, every transaction is recorded, duplicated, and stored in a massive number of nodes in a network. For an incidence of fraud to occur, every node in the network would have to be successfully hacked. In reality, if one node is hacked, the duplicates instantly replace the original data.
With 3D Secure, this kind of security is at least mimicked and possibly duplicated. This is because each step in the authentication process triggers several automated security systems, all of which independently record and track the information transmitted and verified. Even if the user’s data is intercepted at one point in the transaction, the difference in the information at that point compared to another point would set off a security measure that would at very least shut down the user’s credit or debit card. This would end the transaction, and prevent further unauthorized transactions until further steps are taken.
Benefits of 3D Secure
This robust system of protections guards against identity theft directed at the consumer, but it also protects online merchants from payment fraud.
Payment Liability Shift
In many cases of fraud, the card provider is held liable for the management of the funds. When this happens with legacy payment processors, the merchant is usually hit with a fee. Here at Leap Payments, we don’t punish you for incidents like this, but that is another issue.
Chargebacks pile up and are a frequent cause of traditional payment processors canceling services to online merchants, who then get hit with the “High-Risk Merchant” label. 3DS reduces chargebacks, saving you money, hassle, and potential service issues.
As mentioned above, 3DS doubles the number of checkpoints of the average transaction, at least. This makes hacking a transaction more difficult by an order of magnitude.
Payment Fraud Prevention
Payment fraud is the number one reason consumers abandon a payment method. This is the primary reason Visa and MasterCard went through the trouble of inventing this added layer of security.
Get Top Quality Security With Leap Payments
Here at Leap Payments, your security is as important to us as our own security. All too often, high-risk merchants who have been cut off by traditional payment processors are denied full security solutions for their online transactions. Our team is dedicated to ensuring that merchants who work with us benefit from the highest degree of digital protection that the latest security tools and techniques provide.
Signing up is easy, and we never make you wait more than three business days to find out if you qualify. Get in touch with Leap Payments today to learn more.
We Also Offer High Risk Merchant Accounts
Merchant services for businesses deemed “too risky” to offer services to. We approve industries that get declined and closed by other providers. With over 15 partnering banks, we have made it our goal to become experts in your industry and find suitable and sustainable sources for your business to process. To learn more about our high risk credit card processing, review our in-depth page here: high risk merchant accounts, or give us a call at (800) 993-6300.