False declines during the 3DS process can hurt every entity in the payments flow: card schemes, issuers, payment service providers (PSPs), merchants, and cardholders. When a card transaction is declined because it is erroneously deemed to be fraudulent, the repercussions are wide:

• The cardholder may abandon the cart, money directly out of the pocket of the merchant for that sale.
• The merchant may decide not to submit future transactions for 3DS authentication increasing chargebacks and fraud.
• The cardholder might blame the card and start using a different card for online transactions, or maybe get rid of the troublesome card altogether.

Entersekt’s solution

With Entersekt’s EMV 3-D Secure ACS used in conjunction with risk intelligence and silent authenticators, the occurrence of false declines drops significantly. In fact, when our new Browser ID capability is enabled for 3DS, we will be able to identify a returning legitimate customer with 100% certainty, and ensure they are recognized without friction, and certainly not declined.

EMV 3-D Secure is to online payments and other card-not-present (CNP) transactions what EMV chip cards are to in-person payments. The primary objective is to prevent fraudulent use of payment cards. However, online transactions present unique challenges that EMVCo has addressed with EMV 3-D Secure 2.0: to authenticate the user of the card without obstructing the checkout process.

With 3-D Secure 1.0, the user experience was severely disruptive, causing cardholders and merchants to understandably abandon use. However, fraud costs have soared in regions, like North America, that do not mandate 3DS, and have gone down in markets with mandates, such as Europe.

Major advances with EMV 3-D Secure

EMV 3-D Secure barely resembles 3DS 1.0, and it is imperative that issuers optimize the new options of 2.0 and merchants give it a fresh start. Simply the increase in data elements, (10 times more data than was passed with the transaction in 1.0) allows issuers to assess the risk more accurately. But there’s more.

• For issuers, taking advantage of the opportunity to utilize risk data during the 3DS flow allows them to assess risk more accurately, reducing friction that could lead to checkout abandonment. Furthermore, today there are authentication methods that customers prefer, such as biometrics, so it is important to retire the cumbersome, easily intercepted OTPs and switch to modern authentication methods. In fact, Entersekt offers silent authenticators such as Browser ID that enable an issuer to authenticate with 100% confidence.
• For merchants, it is important to begin using the 3DS flow again. The cost of fraud is going to accelerate as fraudsters become more adept at using AI tools to advance their efforts. Today’s 3DS is not only an excellent tool to reduce chargebacks and other fraud-related losses, but also to cultivate customer loyalty.

There are more weapons against CNP fraud than ever before. They detect fraud more accurately and authenticate cardholders more seamlessly, giving customers peace of mind that their bank and the merchants they frequent care about their security and their buying experience.

Customers abandon their online shopping cart during checkout for many reasons: unexpected fees, slow website speeds, complicated checkout processes, and more. An intrusive authentication experience need not be a factor!

With Entersekt’s 3DS, customers will experience authentication with minimal to no friction (in regions that don’t require a challenge). In addition, the use of market-leading risk data can detect fraud with more accuracy than ever before.

How it works

Entersekt uses risk data from numerous sources to detect the level of risk, then applies the issuer’s rules to determine the appropriate course of action:

• Approve frictionlessly for low risk
• Issue a challenge for moderate risk
• Decline for high risk

Everyone knows someone who has been a victim of credit card fraud or account takeover fraud. Consumers have come to value the right amount of friction and are likelier to keep using a card that is secure, without unreasonably disrupting the checkout experience. Entersekt cannot solve all the reasons for checkout abandonment, but we can ensure 3DS authentication is not one of them.

Chargeback disputes can cost merchants and the payment industry countless dollars in both out-of-pocket and operational costs.From criminal fraud to some types of friendly fraud, there is a steep price, and with the resourcefulness and AI tools available to fraudsters, this cost is likely to escalate.

Old-fashioned authentication methods like OTPs have become easy pickings for fraudsters, not to mention the clunky experience they can cause for cardholders.

Entersekt’s solution

Our 3DS reduces the cost of criminal fraud by practically eliminating some tactics, such as stolen and counterfeit cards, and unauthorized card use. With advanced risk data and authentication methods, like biometrics and Browser ID, Entersekt can identify that the proper accountholder is initiating the transaction, while also providing a user-friendly, often frictionless experience for the cardholder.

And while friendly fraud can be a challenge to prove, modern authentication methods provide proof of the authenticated transaction that issuers can view in the Admin Portal. For customers innocently forgetting a purchase or claiming not to have authorized it, there is a digitally signed public key certificate providing a record of proof showing they performed the authentication from their device. This proof saves issuers money lost to chargebacks and gives merchants another good reason to submit transactions for 3DS authentication.

For years, merchants have struggled to strike the balance between fraud prevention and transaction success, between authentication friction and seamless customer experience. There’s hardly anyone who has not been affected by fraud after buying online, either directly, or through someone they know. If a merchant they frequent allows this to happen, they are bound to project negative feelings on that merchant.

As a result of the ubiquity of fraud, consumers have a higher tolerance threshold for security during their payment transactions than they may have in the past. This is good news for merchants who want to reduce the cost of fraud and chargebacks.

Why merchants should look again 3-D Secure

It is time to take a fresh look at 3-D Secure. Today’s EMV 3DS 2.0 bears no resemblance to the original 3DS 1.0. The data that is passed to issuers with a 3DS transaction gives them much more context for assessing risk accurately and with less friction. Plus, many issuers have employed advanced risk engines and user-preferred authentication methods, like biometrics and frictionless authentication, which protects the cardholder with minimal to no friction.

Entersekt’s 3DS Server and the 3DS SDK for merchant apps enable merchants to take advantage of a proven fraud prevention solution that lets customers know you are looking out for them. It also removes liability from the merchant if a 3DS-authenticated transaction turns out to be fraud.

Most importantly, the new 3DS 2.0 provides the framework to minimize friction during authentication, contributing to a higher authorization rate.