3D Secure: Minimising The Friction Points and Increasing Conversions

3D secure3D Secure is an extra layer of online security, providing that vital second step that previously was only available to merchants when a customer was making a payment in store.

In store, in most countries, customers paying by credit or debit card need to enter a PIN number to verify they are the owner of the card they are using. Whereas online, that second layer of security didn’t exist, until 3D Secure was rolled out. Visa, MasterCard and American Express support and are integrated with 3D Secure technology.

Customers in the UK are used to seeing the card schemes security brands at checkout: Verified by Visa (VBV), MasterCard SecureCode (MS) and American Express SafeKey. Retailers can be confident that transactions processed using 3D Secure and other online security checks are more likely to be genuine, initiated by the cardholder and therefore not subject to chargebacks. In fact, if a merchant keeps payment fraud to an acceptable level, transactions using 3D Secure cannot be charged back to the merchant.

This system certainly helps reduce online fraud, but it isn’t fool proof. Unfortunately, not all customers are happy entering another password before they can check out. Some forget and don’t want to spend time re-entering details to create a new password, especially if they’re purchasing using mobile device. Although 3D Secure improves security, it can reduce conversion rates at checkout. Here are a few ways you can combat this and get sales back up.

How To Improve 3D Secure Conversions

#1: It depends on the country

In some countries, such as the UK, Nordic countries and parts of Northern Europe, customers are now used to 3D Secure. They are also reassured by this technology and the additional level or security. In markets where most banks have opted-in, where this is an experience on the majority of retail websites, and regulatory bodies mandate a second security step, conversion rates have exceeded pre-rollout levels.

However, in countries where 3D Secure is not widely recognised, merchants looking for cross-border sales may experience higher cart abandonment rates as consumers are faced with an unfamiliar next step. Merchants should take advice from their payment service provider about what fraud prevention tools to utilise in different markets.

For more on fraud solutions for e-commerce businesses download our whitepaper here.

#2: Is the experience passive?

One of the reasons for a reduction in cart abandonment rates as a result of 3D Secure is ongoing investment in this technology. Banks and payment providers are keen to balance the security needs with the needs of merchants to ensure their customers complete the checkout process.

A passive 3D Secure process was invented and implemented to achieve that. Instead of asking a customer to input the same password on the same website they might have done a week or month beforehand, browser data and cookies recognise this is a repeat customer and therefore ensure they can get through the checkout quickly. Customers don’t need to enter the same password more than once on the same website, unless they’ve recently changed their 3D Secure password. Rules can be set so that for certain transactions, such as large values, the cardholder’s 3D Secure is requested.

As a result of a more flexible passive experience, conversion drop-offs have reduced further in some markets, with a noticeable impact in Latin America where 3D Secure has taken a while to become widely adopted and accepted.

#3: Reduce friction throughout the buying and checkout process

Customers are happy knowing that retailers and banks care about their security.

With EMV in the US, Chip and PIN in Europe, and GDPR and PSD2 coming into force in 2018, customers are aware of the risk of online fraud and want to know security measures are in place that will protect them. 3D Secure achieves that; hence the rise in conversion in countries where it has become universally accepted.

What customers don’t want is a clunky, difficult to navigate website (especially on mobile devices), followed by a protracted checkout process, then an extra layer of security. That is an online retail recipe for disaster. Only the most persistent customers will continue to the end. Review your website statistics to assess where and why customers give up searching or abandon baskets.

Once you understand the friction points, you can make changes to reduce bounce and cart abandonment rates, thereby improving conversion at the final stage, the checkout.

#4: Coming Soon: 3D Secure 2.0

Earlier in 2017, Visa announced 3D Secure 2.0, a “Better, stronger fraud-detection intelligence” solution for banks, payment providers and online retailers.

Visa announced a system that will “enable a real-time, secure, information-sharing pipeline that merchants can use to send an unprecedented number of transaction attributes that the issuer can use to authenticate customers more accurately without asking for a static password or slowing down commerce.”

Rollout will start from April 2019, with a testing phase during 2018. Assuming the balance between security and user-experience is achieved with 2.0, conversion drop-offs should be a thing of the past.

If you have any questions about fraud prevention and how to balance conversion rates with robust security measures, please get in touch with our team. Call +44 (0)808 273 6866 or email [email protected]