The importance of online security in our modern world cannot be over emphasized. As more
mobile devices become very popular around the world cyber criminals are also becoming more
knowledgeable and tricky. This poses great danger to payment gateways and online merchant
stores. This is the case as seen with high rates of fraudulent chargebacks, risky cross border
transactions and the use of high risk merchant accounts by merchant stores around the world. .
In worst case scenarios when a failed transaction is being initiated by a fraudulent foreign online
company the recovery of funds seems almost impossible. These and many other factors led to the
development of a secured online payment system called the 3 Domain secure system (3D secure
HOW 3D SYSTEM FUNCTIONS
As a secured system, 3D security involves three different parties (Domain) during the payment
process of a particular good or service. These parties are ;
1) THE BANK: The bank issues the card being used (Issues domain)
2) THE MERCHANT: The person or shop to which the money is being paid.
3) NETWORK USED: example Visa / MasterCard.
When a transaction is initiated by a user of a 3-D Secure technology, the payment process is
being redirected to the website of the bank that has issued the card to authenticate the
transaction. 3-D Secure ask shoppers to enter either a static or dynamic password to help confirm
the identity of the cardholder during the time of purchase. For first time shoppers, a registration
process may be available at the time of the transaction itself. During the registration process
tokens (password) may be sent to the users registered EMAIL ID and Mobile Number associated
with the card. After verification payment is initiated and money withdrawn from the account.
The use of 3 D secured versions have evolved over time to more secured versions that provide
convenience to users.
PROBLEMS WITH THE FIRST EDITION ( 3D SECURE 1.0)
1) LENGTHY PAYMENT PROCEDUES
With the 3D secure version 1.0 system, customers or online shoppers were expected to confirm
payment by filling a form sent to them from the bank where they had their accounts registered.
They were expected to insert passwords which were long and clunky and often times customers
forgot these passwords. This lengthy procedure led to abandonment of transactions in certain
cases and hence a general fall in sales of online merchants.
2) HIGH RISK MERCHANT ACCOUNTS: The use of the verion 1.0 created a situation
where fraudsters or hackers could easily access a merchant’s account or intrusion into the
payment network. This will; in many instances provoke a situation of fraudulent chargebacks by
3) FRAUDULENT CHARGEBACKS: Most at times, online buyers and consumers
usually chose passwords that are easy to remember and these made it easy for the password to be
guessed by potential fraudsters. Also, in the event of occurrence of fraud, merchant shop owners
were given huge sums of money to pay as fraudulent charge backs.
4) CROSS BORDER TRANSACTIONS: International businesses also faced many challenges
with 3DS 1.0. This was mainly due to the way payments were processed by different markets in different
countries. Every region has different security requirements and legislation, and the adoption of the 3DS
1.0 protocol in general was inconsistent from bank to bank and country to country. To handle these issue
3d security systems were used where it made sense and abandoned where it didn’t. This made cross
border transactions payments very risky. All the above points of friction led to the development of a more
advanced system “3D secure 2.0”
3D SECURE 2.0
How it functions;
It uses token based biometric authentications instead of static password. The use of tokens
involves the use of popular sites (for example G mail accounts) and payment channels that are
used all over the world.
ADVANTAGES AND PROBLEMS 3D SECURE 2.0
3D security uses a combination of certified software developer kits (SDK) with paired data
sharing Application program interface (API). This implies that it can share private information
between businesses and banks within a relatively safe environment. This information can be kept
within the systems data base and could be used to influence future decisions. Also the use of
biometric authentication methods, such as face or voice recognition, finger prints, is considered
more secure than a static password. Also, they are much easier to use and create a better
experience for consumers. The security problems faced by merchant accounts “high risk
merchant accounts”, were reduced considerably. Also the security problems faced by cross
border transactions were addressed. This has gone a long way to reduce the rate of fraudulent
charge backs that merchant stores have to pay.
2. Increased confidence of the users
This is because when online shoppers know that their security is guaranteed they have increased
confidence when releasing their credit card information.
3. Blame avoidance and Risk Liability Shift
Merchants who own online stores will no longer take the blame for a failed transaction and the
influence of fraudsters in a system. By supporting additional data during transaction some risk
can be avoided by the complete cancellation of certain transactions or further postponement of
payment for verification purposes.
4. General increase in sales
The development of the 3d secure 2.0 has increased sales in cross border transactions worldwide.
Also with a drop in the events of fraudulent chargebacks merchants can realize more profit.
However even though 3 D secure 2.0 is better than 3D secure 1.0, there are still some issues that
technological innovations need to improve on.
FUTURE ISSUES TO BE IMPROVED ON
Owners of multiple digital devices are expected to go through verification processes that
one of the devices registered under their names may have already undertaken. This makes
some users to get pissed and abandon the transaction.
When tokens are being sent to users, they involve the use of one time passwords ( OTP).
These passwords when sent needs to be delivered on time and used in some cases
immediately. There are cases where card holders have forgotten their passwords as well
inserted multiple passwords due to multiple send instructions for the tokens used. This
may lead to the use of wrong passwords and in certain cases transaction gets declined by
default as well as the abandonment of the transaction by customers.
In most cases transactions are still being redirected to the domain issuers of the domain
servers. If the domain servers are in places where internets speed is low it may slow
down transactions and hence could lead to an abandonment of the entire process by the
For more help or information please email us at firstname.lastname@example.org or call our support centre.
12 Constance Street,
London E16 2DQ, United Kingdom.
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