Remember, during maths class, we read this term “directly proportional”? Which meant if one thing increased, the other did as well, and the rise of online payments is directly proportional to fraud risks. Somewhere, someone is out there to scam you, and there’s no telling who to trust.
Luckily, there’s something called 3DS 2.0, which a lot of businesses have been adopting lately. It is said to make transactions safer and a much more secure option than its predecessor, 3DS 1.0, which had a lot of limitations.
But why are businesses adopting it so much? In this article, we’ll cover that in detail.
The limitations of 3DS 1.0
3D Secure 1.0 was once a well-known fraud mitigation tool for online payments. However, there were certain restrictions on this security protocol. These include:
Unsatisfactory user experience
Some users can’t see the 3DS authentication page on their devices. It can be inconvenient to type passwords, PINs, and OTPs manually.
Reduced rates of success
The extra step needed for verification is usually the source of this.
Managing several passwords
It is inconvenient to remember distinct passwords for every account.
Transaction failures and cart abandonment are highly likely when there is friction in the user experience. For any firm, this is bad news. However, there is a way to solve that.
What 3DS 2.0 Brings to the Table?
In order to address these issues with 3DS 1.0, Visa and Mastercard collaborated to build 3D Secure 2.0 in 2016. One significant modification is that the protocol now allows risk-based authentication decisions and transmits more than 100 data items for every transaction, which is advantageous to issuers and merchants alike. The perceived risk of the transaction, as assessed by the data elements that travel via 3DS 2.0, determines whether or not to ask the cardholder to validate their identity.
Low-risk transactions are passively verified using a “frictionless flow” that keeps the cardholder undisturbed and lowers checkout abandonment. In order to better retain mobile users, 3DS 2.0 was also made to be responsive to mobile devices and have native in-app payment choices rather than iframes or browser popups. Lastly, 3DS 2.0 eliminates static passwords and allows biometric and token-based authentication, making it more difficult for hackers to obtain credentials.
Now, it’s clear that 3DS 2.0 is superior to 3DS 1.0, but why are so many businesses adopting it?
Why Businesses Are Upgrading: Key Drivers
Now there are some major reasons why businesses are fast adopting 3DS 2.0, which the table below would explain.
|
Key Benefit |
What It Means (Simple + Conversational) |
|
Lower Checkout Friction & Higher Conversion |
3DS 2.0 keeps the checkout smooth. More transactions go through without asking customers to do anything extra. Biometrics make authentication faster, especially on mobile, where most people shop today. |
|
Better Fraud Prevention With Data-Rich Risk Scoring |
It sends 100+ data points (like device info, past behaviour, etc.) so issuers can spot risky attempts instantly. This means fewer fraud attempts slipping through and fewer fraud-related chargebacks. |
|
Compliance With Modern Regulations |
Many countries now require stronger authentication—like RBI’s rules in India or PSD2 in Europe. Upgrading helps businesses avoid declines, stay compliant, and be ready for upcoming regulations. |
|
Higher Approval Rates & Fewer False Declines |
Smarter scoring helps banks tell real customers from suspicious ones. As a result, fewer genuine transactions get blocked, and more customers complete their purchases smoothly. |
|
Better Mobile & Cross-Device Experience |
The old pop-ups are gone. 3DS 2.0 uses modern, app-friendly screens and API-based flows that work seamlessly across devices. It also supports subscriptions, recurring payments, and tokenised cards. |
Looking ahead
There will likely be major improvements in authentication techniques in the future of 3D Secure (3DS). As a more practical and safe way to confirm consumer identities, biometric authentication, such as fingerprint and facial recognition, is growing in popularity.
This advancement in authentication improves security measures for companies and streamlines the verification procedure for consumers. Businesses can benefit from enhanced security against unauthorised transactions by significantly lowering the risk of fraud. This extra protection is especially crucial given how quickly internet payments are changing.
It will be crucial to integrate 3DS with emerging digital wallets and payment mechanisms. Businesses may keep ahead of the curve and give their clients safe options by making sure 3DS accepts a variety of payment methods.
Conclusion
The rise of global e-commerce has also given rise to fraud, which is why a lot of business owners have adopted 3DS 2.0 in their businesses to safeguard their payments. If you own a business and have decided to get a payment gateway, 3DS 2.0 becomes non-negotiable at this point, giving your customers a seamless experience and enhancing security will go a long way in your business journey.
