According to a report conducted by Netherlands-based global payment services company Adyen and the strategy consulting company Edgar, Dunn & Company, when 3D Secure is implemented only on specific segments it can actually increase conversions in these markets.
Developed by the MasterCard and Visa card schemes, 3D Secure is an additional security layer for authenticating cardholders online. Traditionally, online merchants have adopted a binary view: they either implement 3D Secure across all transactions or not at all. By analysing transactions processed on its payment platform, Adyen has detailed data about the impact of 3D Secure across its portfolio in selected countries. By combining authorization rates from card issuers with merchant shopping cart abandonment rates, Adyen reveals that:
• India, Czech Republic, Russia and the UK show the highest uplift in conversion rates where 3D Secure has been implemented on all transactions. In India, the uplift is almost 30%, and in the UK it is around 2.5%. • Brazil, China and the US suffer the most when 3D Secure has been implemented for all transactions. In Brazil, conversion rates drop by as much as 55%, and China and the US see an average decline of 43 %. • Card issuers have a higher likelihood of refusing transactions above a specific risk threshold because high value transactions tend to be riskier. This means that conversion rates can be significantly lower among high-value transactions due to higher decline rates.
For merchants it is often difficult to assess if 3D Secure is an appropriate solution to limit fraud risks in a specific country without negatively impacting sales. As a result, close coordination with payment partners has proven to be useful to gain a better understanding of the potential positive or negative impacts of 3D Secure in specific countries, prior to implementation.
An Adyen-developed Dynamic 3D Secure feature allows merchants to use 3D Secure for specific segments of transactions, such as transactions that exceed the merchant’s pre-defined value or risk threshold. Dynamic 3D Secure can be fully customized to allow merchants to set specific thresholds for each country.
Adyen is a global company offering omni-channel payment services. It supports 187 transaction currencies, 14 settlement currencies and 224 preferred local payment methods used on six continents.
For more information about Adyen, please check out a detailed profile of this company in our dedicated, industry-specific online companies database.
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