Preparing for a post EMV 3-D Secure 2.0 world

Written by Product lead, Martijn van Os

Most merchants will tell you – digital payment acceptance is complicated. Consumers have more options in an ever-growing eCommerce market, and merchants are expected to expand their payment methods while fighting an increase in fraud. While news of the 3DS 1.0 being replaced may have sounded disruptive, in reality it meant an improvement for frictionless authentication with less checkout disruption and abandonment. In short, simple, smart and fast payments.

For an industry that’s grown to include more data points, devices and technology, EMV 3DS (2.0) incorporates new data points and delivers a robust offering with 10x more data to evaluate. Markets using EMV 3DS (2.0) are already enjoying higher authorization improvements over 3DS 1.0 by six basis points according to global Mastercard authorization data with potentially more improvements to follow.

Pioneering frictionless authentication

Now, post implementation mandate, merchant’s authentication experience with EMV 3DS (2.0) can strive for a seamless payment experience for consumers. The new EMV 3DS (2.0) standard offers a great user experience across devices with frictionless authentication, lowering checkout disruption and cart abandonment. For merchants this can mean greater revenue and customer satisfaction, and for issuers and acquirers’ greater volumes of transactions.

For merchants this can mean greater revenue and customer satisfaction, and for issuers and acquirers' greater volumes of transactions.

As EMV 3DS (2.0) allows 10x more data, this leads to improving their user experience with fewer false declines. This rich data also makes decisioning and fraud management simple for the issuer. It’s quick and easy to identify fraud accurately, meaning the merchant can spend less time on security with less disruption to the payment process.

And when consumers do need to provide extra authentication, EMV 3DS (2.0) allows for an array of strong two-factor authentication methods. One-time passwords, biometrics, knowledge-based questions, or future methods that would not be possible or impractical for 3DS 1.0.

?

Peerless consumer convenience

For consumers the enhancements of EMV 3DS (2.0) are seamless. The future of frictionless payments for consumers can be as simple as tapping or clicking, approved in the background thanks to passive biometrics and behavioral analysis.

Now that we’ve moved to a non-browser native standard, consumers have the opportunity to move between devices or apps they wish to buy with, further reducing friction and checkout abandonment and making it easier for merchants to enable multichannel payments. As we connect to different types of devices whether they be smart phone, watch, tablet, smart home and new connected devices moving forward, the flexibility with EMV 3DS (2.0)’s data design will support a seamless process across devices.

Merchant protection

EMV 3DS (2.0) keeps merchants safe and regulation compliant across the globe. For instance, in Europe, it’s mandated by Payment Services Directive 2 (PSD2), and allows two-factor authentication. For this and other markets where additional authentication is required, merchants can let the issuer know during the authentication flow to ensure the transaction meets local regulations.

Thanks to behind-the-scenes authentication merchants may also cut down on chargeback fees, lost inventory, and overheads. Even ‘friendly fraud’ (where the cardholder falsely initiates a chargeback) can be identified. EMV 3DS (2.0) captures information such as the device used or IP address where the purchase came from, which can be used to verify the purchaser’s identity.

Liability has also changed from 3DS 1.0 to EMV 3DS (2.0). Currently liability works the same, in that it takes into account the issuer’s enrolment in EMV 3DS (2.0) and the transaction authentication status, EMV 3DS (2.0) will extend this. Merchants will get full chargeback protection in the case of fraud regardless of the issuer’s enrolment in the EMV 3DS (2.0) program.

Ready for eCommerce now and in the future

Merchants, issuers, acquirers and consumers across the world are beginning to realize the benefits of EMV 3DS (2.0). The rich data, strong functionality, and tough security will bring to fruition the next evolution in payments.

The data shared opens up opportunity to explore new ways of approving payments and adding value to the customer and payment journeys. With passive biometrics and wearable technology on the rise, EMV 3DS (2.0) may have the opportunity to pre-authenticate payments based on how you walk, talk, or handle your phone, taking password-free to a whole new level.

Building a more detailed history of a person through their transactions also opens the door for rapid enablement of services. Something as simple as approval for new cards or instalment payments, to setting up a business account with pre-filled information or speeding up acceptance for loans or mortgages.

Where 3DS 1.0 was often an obstacle to work around, EMV 3DS (2.0) intends to advance eCommerce for the future.