CNP Fraud: Is 3-D Secure the option to fight it?

Wednesday 23 March 2022 08:52 CET | Editor: Irina Ionescu | Interview

Lori Van Deloo, Vice President of WW Market Strategy at Outseer, shares insights gleaned from a recently published global study from Aite-Novarica Group, on the use of 3-D Secure as a key technology for fighting CNP fraud and an effective tool for increasing CNP transaction authorisation rates to maximise digital payment growth

Digital transformation has been driving a rapid shift to digital commerce and the introduction of new payment models. What are some of the trends you’ve seen?

If you think about the last 24 months, without a doubt, digital transformation is reshaping nearly every facet of our lives – how we live, work and how we shop. In 2020, eMarketer reported global ecommerce spending reached USD 4.2 trillion in 2020, with a growth rate of 28% year over year, and is expected to grow to USD 5.9 trillion by 2023.

How has this growth in CNP transactions affected fraud?

As digital transformation continues to accelerate, fraudsters are evolving their strategies too. We have seen a significant rise in CNP fraud, which now accounts for over half of all gross fraud losses. The Aite-Novarica Group estimates CNP fraud losses were USD 14.4 billion in 2020 and projected to reach USD 17.2 billion by 2023.

CNP fraud affects both issuers and merchants, but each party has its own challenges. What are some of the strategies they are employing to combat CNP fraud?

The Aite-Novarica Group has recently published extensive research that addresses this question. The study provides in-depth insights into both issuer and merchant attitudes toward and the usage of 3-DSecure as an effective technology for fighting CNP fraud. A key benefit of 3-D Secure is its ability to strike a balance between managing risk and maintaining a seamless experience for end-users.

For issuers and issuer processors and merchants alike, the top mentioned solution is 3-DSecure. ‘100% of issuers and issuer processors,’ and ‘69% of merchants’ said they are using 3-DSecure. And interestingly, of those merchants who are not yet using 3-DSecure, ‘two-thirds’ said they plan to implement 3-DSecure within the next 12 months.

Most issuers also report that their 3-D Secure transaction volumes are increasing, primarily due to the growth in CNP payment volume and Strong Customer Authentication (SCA) mandates, as 3-D Secure can be used to meet PSD2 SCA regulation requirements.

What is the effectiveness of 3-DSecure, and are there any differences you are seeing in regulated versus unregulated countries and across geographic markets?

3-D Secure is seen to be as effective or more effective when compared to other fraud detection solutions. According to the study, 82% of issuers and issuer processors interviewed said that 3-DSecure is ‘as effective or more effective’ for fraud detection as compared to other fraud solutions. This figure rises to ‘100% of issuers’ in regions such as Europe and parts of Asia Pacific, where SCA and other mandates have helped accelerate adoption and 3-D Secure is used for the majority of CNP transactions. The lower fraud rates in these regions demonstrate the realised benefits of this stronger security. 

But 3-DSecure is not only an effective fraud detection solution. It also helps drive higher CNP authorisation rates – a key goal for merchants and issuers to grow their business. In every region, Aite-Novarica found that significantly more merchants said they achieve 85% or higher authorisation rates when transactions go through 3-D Secure versus those transactions that do not go through 3-D Secure.

Lastly, what are your recommendations for issuers and merchants as they map out their strategies for 3-D Secure?

We see fighting payment fraud as a shared responsibility and recommend that the strongest results from using 3-D Secure will come through collaboration and broad participation across the ecosystem. When the full set of CNP transactions are sent through 3-Dsecure, issuers and merchants can benefit from greater precision detection to distinguish genuine users from fraudsters. This translates into higher authorisation rates, more seamless shopping experiences, increased revenue, and greater profit potential for all parties.

Learn more about the study findings and the benefits of using 3-DSecure to protect against CNP fraud:

About the Study

Aite-Novarica Group’s research, sponsored by Outseer, an RSA company, was conducted in Q2 and Q3 of 2021. The study consisted of in-depth interviews with card issuers and issuer processors, and a quantitative survey of 756 merchants, equally distributed across North America, Europe, and Asia Pacific regions. Statistical tests were conducted at the 95% confidence level, with a 4-point margin of error.

This editorial is part of The Fraud Prevention in Ecommerce Report 2021/2022, the ultimate source of knowledge that delves into the evolutionary trail of the payments fraud ecosystem, revealing the most effective security methods for businesses to win the battle against bad actors.

About Lori Van Deloo

Lori is a global product, marketing, and innovation executive with deep experience in Fintech and Payments. She spent a number of years at Visa and later founded and led a real-time, video banking SaaS startup. Previously, Lori held leadership roles at BEA Systems (acquired by Oracle), Openwave Systems, and Accenture. Lori received her MBA from the UCLA Anderson School of Management, where she has also served as a Distinguished Visiting Professor of Global Payments and Fintech Innovation.

About Outseer

Outseer, an RSA company, empowers the digital economy to grow by authenticating billions of transactions annually. Our payment and account monitoring solutions increase revenue and reduce customer friction for card issuing banks, payment processors, and merchants worldwide. Leveraging 20 billion annual transactions from 6,000 global institutions contributing to the Outseer Global Data Network, our identity-based science delivers the highest fraud detection rates and lowest customer intervention in the industry. See what others can’t at

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Keywords: CNP fraud, 3-D Secure, fraud detection, fraud management, RSA, cybersecurity, online fraud, Card-not-present fraud
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime