3-D Secure version 1(3DS 1) has been around since 1999, when ecommerce was in its infancy and online shopping was largely done on desktop computers. Now, the landscape is radically different: ecommerce volumes keep expanding and consumers shop on a wide variety of devices — from phones and tablets, to smart home devices.
But 3DS 1 wasn't designed with all those devices in mind, so the customer experience isn't always as smooth as it should be. Fortunately, upgrading to EMV®3DS can take away a lot of the friction customers may experience.
In fact, it's becoming urgent for merchants to upgrade, as support for 3DS will end globally on 16 October 2022. Merchants who stay on 3DS 1 after this date will:
No longer get a response to authentication requests.
Experience an increase in failed transactions owing to lack of data.
Become liable for fraudulent transactions.
Device agnosticism — customers get a great experience that's consistent across multiple devices and digital channels.
10x more data — allows for better fraud management as issuers can make more informed risk and authorisation decisions, which further reduces friction.
Biometric authentication wherever issuers support it — another way to improve the experience as customers don't need to remember passwords, and ecommerce becomes similar to other smart device experiences.
Merchants should bear in mind that the payment system is evolving fast, with alternative ways to pay, ranging from Buy Now, Pay Later (BNPL) to account-to-account payments. Merchants who want to offer alternative payment options will find that many of them require EMV®3DS for authentication or transaction flagging capabilities, to avoid issues like unnecessary checkout friction and inadvertently declined transactions. Turn to your advantage
With the revised Payment Services Directive and its Strong Customer Authentication requirement (PSD2 SCA) now fully enforced, switching to EMV®3DS can help you take advantage of SCA features for smoother authentication.
With 10x more data, EMV®3DS enhances transparency, which increases confidence among issuers and acquirers, while allowing authentication exemptions to be applied. In particular, the 'low risk' exemption (based on transaction risk analysis, TRA) for qualifying transactions is likely to be considered for acceptance by acquirers, provided merchants can show they're managing fraud effectively and can reliably recognise low-risk customers.
Meanwhile, authentication itself is changing with increased use of biometrics. This is helping to drive the emergence of delegated authentication, which gives merchants more control (in agreement with their acquirers) over how authentication is performed. One familiar example is the Fast Identity Online (FIDO) standard, which connects a user to their device using biometrics, and allows secure, seamless authentication of transactions made using mobile wallets like Apple Pay and Google Pay.
Just 24% of the UK consumers use their smartphones to enhance their in-store shopping experiences, according to the Global Digital Shopping Playbook (UK edition)1, even though using smartphones in stores can cut in-store shopping friction by 41%2.
The popularity of contactless cards in the UK may be one reason it's been difficult to convince UK consumers of the benefits of using mobile payments in store. But younger shoppers appear to be ahead of the game. Our playbook3 shows that, compared with the average UK consumer:
Millennials are twice as likely to pay using mobile wallets
Gen Z consumers are three times more likely to pay using mobile wallets
This suggests that mobile card payments will become more widespread in the UK — so merchants (and their acquirers) should get ready to embrace the shift.
Unlike the GBP 100 limit on tap-to-pay with contactless cards in the UK, there's no comparable limit on mobile wallet purchases, because authorisation takes place as part of the FIDO standard described above. So, merchants who are geared up to accept mobile wallet payments can offer consumers a frictionless tap-to-pay shopping experience in the store, even for higher-value purchases. To meet current demand and help boost instore smartphone usage, merchants should ensure they work with payment platforms and acquirers that support mobile wallet payments.
As shoppers, checkout friction can leave us dissatisfied. Working with partners like Cybersource can help merchants grow their business and give customers frictionless experiences, no matter how they pay and shop. To find out more about UK shopping trends and payment preferences, download The 2022 Global Digital Shopping Playbook, United Kingdom edition.
Mari-Anne joined Cybersource in June 2017. In her role as European lead – Regional Solutions, she focuses on driving forward solutions which help merchants to provide great customer experiences, while keeping their business secure. Prior to joining Cybersource, she spent 18 years with a large UK retailer, and has led the Fraud and Risk functions for over a decade, being responsible for both ecommerce fraud prevention and internal risk management.
Note: EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.
At Cybersource, we know payments. We helped kick start the ecommerce revolution in 1994 and haven’t looked back since. Through global reach, modern capabilities, and commerce insights, we create flexible, creative commerce solutions for everyday life—experiences that delight your customers and spur growth globally. All through the ease and simplicity of one digital platform to manage all your payment types, fraud strategies, and more. Knowing we are part of Visa and their security-obsessed standards, you can trust that your business is well taken care of—wherever it may go.
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