What is 3D Secure? And Its Advantages for E-commerce

You’ve likely heard of 3D Secure or 3D secure authentication before, but keeping track of all the payment security terms while growing an e-commerce business can feel overwhelming. That said, understanding and implementing the right measures is crucial. 

With over 460,000 e-commerce businesses operating in Europe, customers need a way to know their money is going to a real store, and you need a way to know customers are legitimate to avoid chargebacks.  

This is where 3D Secure payments come in. In this article, you’ll learn:

• What is 3D Secure?
• How do 3D Secure transactions work?
• The benefits of using 3D Secure for e-commerce
• How to simplify your digital payments with dynamic 3D Secure
• How to get started with 3D Secure payments

What is 3D Secure? 

3D Secure (3DS or 3 Domain Secure) is a security protocol that adds an extra layer of protection to online card transactions. Developed by major card networks like Visa and Mastercard, it helps verify that the person making the payment is the cardholder, reducing the risk of fraud and unauthorized transactions.

During checkout, customers may be asked to authenticate the payment through methods like a one-time password (OTP), biometrics, or a banking app. This ensures secure transactions while protecting your businesses from chargebacks.

The updated 3D Secure 2.0 streamlines the process, offering seamless authentication for low-risk purchases while maintaining robust security for higher-risk transactions.

The 3 domains of 3D Secure

This security protocol works with a data exchange between three different domains.

1. Issuer domain. The customer’s bank that issues their card. 
2. Acquirer domain. The bank that holds the seller’s account. 
3. Interoperability domain. Determines which network is required for the transaction.

📚Additional reading: Acquiring Bank vs Issuing Bank: 3 Minute Guide

The current landscape of the the 3D Secure market

The global 3D Secure payment authentication market was valued at $1.10 billion in 2022 and is projected to grow at an annual rate of 12.7% until 2030.

Image source: Grand View Research

The rise in Card-Not-Present (CNP) fraud and the growth of online shopping are key factors driving this growth. 

Additionally, advancements in 3D Secure technology are improving customer experiences, while the need for strong authentication solutions continues to grow in response to increasingly sophisticated cyber threats.

How Do 3D Secure Transactions Work? 

The 3D Secure authentication process involves the following steps:

1. Initiation. When a customer makes an online purchase and proceeds to checkout, they enter their card details as usual.
2. Authentication request. Your payment gateway sends an authentication request to the card issuer to verify if the card is enrolled in the 3D Secure program.
3. Verification. If the card is enrolled, the issuer assesses the transaction's risk using various data points, such as transaction history and device information. For non-enrolled cards, the transaction proceeds without additional authentication.
4. Challenge or frictionless flow. For transactions deemed low-risk, the issuer may allow the transaction to proceed without additional input from the customer, resulting in a frictionless experience. For higher-risk transactions, the issuer may prompt the customer for additional authentication, such as entering a one-time password (OTP), biometric verification, or using a banking app.
5. Authentication outcome. If the customer successfully completes the authentication, the transaction continues to authorization. If the customer fails to authenticate, the transaction is declined, preventing potential fraudulent activity.
6. Authorization and completion. After successful 3D secure authentication, the transaction is submitted for authorization. The issuer then confirms the availability of funds and approves or declines the transaction accordingly.

Image source: gpayments.com

📚 Further reading:

• Secure Payments: How to Accept Them Online and In-Person
• Online Payment Failure: Why it Happens and How to Avoid it

The benefits of using 3D Secure for e-commerce

3D Secure authentication provides significant benefits for e-commerce businesses and their customers:

• Reduces the risk of fraud. Additional security layers make it harder for scammers to commit fraud online. It reassures customers they’re shopping with a legitimate company, while protecting your business from fraudulent transactions.
• Shifts liability to card-issuing banks. By using 3D Secure, your business is protected from chargeback liability, as the card-issuing bank assumes responsibility for authenticated transactions.
• Enhances protection for customers and merchants. Customers gain extra layers of authentication, making it harder for their credit or debit card information to be stolen and misused. Businesses benefit from fewer fraudulent transactions and increased trust from customers.
• Ensures secure data transmission. All transactions are protected by SSL encryption, safeguarding sensitive data as it moves between financial institutions and ensuring a safe process for all parties involved.
• Improves the customer experience. Safer transactions and a simplified checkout process lead to happier customers, increasing the likelihood of repeat purchases and brand loyalty.
• Facilitates international growth. The added security enables safer international transactions, helping your business reach new markets and expand globally with confidence.
• Supports regulatory compliance. 3D Secure helps businesses meet payment regulations, such as PSD2 in Europe, by providing Strong Customer Authentication (SCA), reducing the risk of non-compliance penalties.

How to simplify your digital payments with dynamic 3D Secure

Traditional 3D Secure can complicate the payment process, leading to lost sales. That’s why MONEI’s 3D Secure verification screen appears directly on your checkout page, avoiding redirects and reducing drop-offs caused by forgotten codes. 

With Dynamic 3D Secure, MONEI streamlines two-factor authentication (2FA) by assessing each transaction's risk. You can adjust your payment method configuration to skip 3D Secure authentication for low-value payments so that they’re processed without interruption, while high-risk transactions go through additional security checks to prevent fraud without blocking legitimate payments.

This smart approach balances fraud prevention and a seamless payment experience. By minimizing unnecessary challenges, Dynamic 3D Secure helps reduce customer drop-offs and boost your conversion rates.

📚Further reading: Frictionless Payments Explained (+ 6 Benefits for Retail and E-commerce)

How to get started with 3D Secure payments

Ready to enhance your e-commerce business? 3D Secure payments not only protect your business from chargebacks but also give your customers peace of mind, building trust and loyalty.

With MONEI, implementing 3D Secure online payments is simple and hassle-free. Integrate with our online payment gateway in just a few clicks and start accepting payments immediately. Once approved as a merchant, you’ll benefit from short settlement times, helping you manage cash flow more efficiently. 

At MONEI, we prioritize secure payments. Our advanced security features ensure your business is protected, allowing you to focus on building strong customer relationships and growing your sales.

🔐Take the next step in securing your payments—get started with MONEI today and let us handle your 3D Secure transactions with ease!

You may also like to read: 

• What is a Payment Gateway? Why You Need One & How it Works
• PSD2: What is It? Why it’s Important + How to Be Compliant
• What is Tokenization? And its Benefits for E-commerce

Sources used (last checked 21/01/2025): 

• 3D Secure Payment Authentication Market Size, Share & Trends Analysis Report (Grand View Research) 
• E-Commerce in Europe - Market Size, Industry Analysis, Trends and Forecasts (2024-2029) (IBISWorld)