The term “3D Secure payment gateway” may seem like a pretentious technical word, but it can help your eCommerce business reduce the number of shopping cart abandonments.
Have you heard that before? We regularly speak to merchants who have heard about the term but aren’t entirely sure what a 3D payment gateway is or how to incorporate it into their high-risk business. And that’s why we created this guide.
We’ll help you understand the intricacies of 3DS Secure payment gateways, explore their advantages, and provide insights on how to implement them effectively.
Whether you’re looking to reduce fraud, manage chargebacks more efficiently, or simply enhance your overall payment security, read on to discover what all high-risk merchants need to know about 3DS secure payment gateways.
What is a 3D Payment Gateway?
3D Secure (Three Domain Secure) is an XML-based protocol designed to be an additional security layer for online credit and debit card transactions.
Also known as “Payer Authentication,” this service provides fraud liability shift and reduced interchange. As a result, this helps merchants to prevent fraud in transactions.
So, at its core, a 3D Secure payment gateway is a technology made by each of the major payment processors to add an extra layer of encryption to consumers for card-not-present merchants.
Consumers know these 3D Secure payment gateways as:
- Verified by Visa
- MasterCard’s SecureCode
- American Express SafeKey
At FastoPayments, we recommend these to merchants in very chargeback-prone industries (and honestly, even for a low-risk merchant looking to reduce chargebacks while enhancing security—it never hurts).
How Do 3D Secure Transactions Work?
A 3D Secure transaction starts with a redirection to a payment gateway through a payment processor. Then, authentication is initiated.
The method of authentication is based on a three-domain model, which is what “3D” means in the name (starting to make sense?).
This consists of the following:
The Acquirer Domain
The bank and the merchant to which the money is being paid.
Issuer Domain
The bank which issued the card being used.
The Interoperability Domain
Visa, MasterCard, AmEx, or any other credit card used. The customer then uses a password to confirm their identity. After password verification, the payment is complete!
💡 TL;DR
3DS, or 3-D Secure, is an advanced authentication protocol designed to add an extra layer of protection to online transactions. Originally developed by Visa and now widely adopted by other major card networks, 3DS requires cardholders to complete an additional verification step during the checkout process. This not only helps to confirm the legitimacy of the transaction but also shifts some liability away from the merchant in cases of fraud.
Advantages of 3D Payment Gateways
Are you thinking, “Great! Who wouldn’t want to shift some liability away from the merchant in cases of fraud?” That’s a fair question, and it’s definitely not the only advantage of having a 3D payment gateway on your website.
However, there are drawbacks to consider, too, so stick around to read those before making your decision (plus, we’ve got tips at the end about how to manage your payment gateway as a high-risk merchant).
For now, let’s explore a few more advantages.
Fraud Claim Reduction: A 3DS secure payment gateway helps reduce fraud allegations by requiring additional verification steps, ensuring transactions are legitimate.
More Robust Protection: 3DS technology provides enhanced protection against the misuse of cards, preventing unauthorized use and reducing the risk of fraud.
Customer Trust: When customers are aware that your business uses 3DS secure payment gateways, their trust in your transactions increases, encouraging them to proceed with confidence.
Sales Increase: Enhanced security leads to greater customer confidence, resulting in more buyers and repeat purchases, thus boosting sales.
International Transactions: 3DS secure payment gateways enable safer acceptance of international card transactions, improving and increasing cross-border transactions.
Secure Transactions: 3DS ensures transactions are secure through Secure Sockets Layer (SSL) encryption, protecting sensitive data during transmission.
Happier Merchants: With a reduction in fraud and chargeback cases, merchants experience greater satisfaction with their business outcomes.
Greater Customer Satisfaction: Programs like Visa Secure and MasterCard SecureCode provide customers with a secure shopping experience, leading to higher satisfaction levels.
Online Validation: Because it uses SSL encryption to securely transmit information, 3DS ensures the proper authentication and authorization of each transaction.
💡 Harness the power of these advantages as a high-risk merchant to create a safer, more trustworthy online shopping environment that not only protects your business but also enhances customer loyalty and satisfaction.
Disadvantages of 3D Payment Gateways
As mentioned, there are some drawbacks to consider. While there aren’t as many cons as there are pros, here are a few things to keep in mind before implementing a 3DS payment gateway into your payment system.
Customer Obstacles: Some customers may view the additional step required for 3DS authentication as an obstacle, potentially deterring them from completing their purchase.
Lack of Knowledge: Customers unfamiliar with 3D Secure may think their purchase is faulty, leading to confusion and potential abandonment of the transaction.
Monotony of Security Codes: Keeping track of multiple security codes and additional approvals can be monotonous and unattractive to customers, negatively impacting their shopping experience.
Browser Compatibility Issues: Some browsers may cause problems with the pop-up window generated for authentication, resulting in lost sales due to the inability to complete the transaction.
Pop-Up Blockers: Some customers employ rigorous pop-up blockers that can prevent the authentication window from appearing, making it impossible for them to complete their purchase (and leading to frustration).
Forgotten Passwords: Authentication often requires customers to input a password to verify the transaction. If customers don’t frequently use this password, they’ll forget it (we all do, c’mon!), causing frustration and possibly leading to abandoned carts.
Additional Costs for Merchants: Unfortunately, some payment processors charge extra fees for this security option.
Here’s Why All High-Risk Merchants Need a 3D Gateway Account
The bottom line?
Customers know their sensitive information is secure with your organization if you have a 3D payment gateway account. This is important in a world were as many as a third of cardholders are scared to shop online due to privacy and payment safety concerns.
Authenticated payments may convince prospective eCommerce shoppers that it is safe to use their own card online. For merchants, it means a reduction in disputed or fraudulent transactions that could lead to increased chargebacks, which are what cause acquiring banks to freeze high-risk merchant accounts.
In addition, it has a minimal impact during the checkout process, so it doesn’t draw out the process, which could cause customers to abandon their shopping carts. So, there are basically a few negatives and a whole ton of positives.
3D Secure Payment Gateway Solutions With A FastoPayments High-Risk Merchant Account
With FastoPayments, you can accept credit cards from your website with our seamless 3D Secure payment gateway integrations.
Along with a sustainable high-risk merchant account, FastoPayments will work with you to ensure you can offer your customers everything they are looking for with secure payment processing.
Apply for a quote and start accepting payments online now!