3-D Secure has had its struggles as a standalone fraud solution, but the 15-year-old authentication system is playing a key role in a new e-commerce security product from Simility powered by artificial intelligence.
One of the criticisms of 3-D secure has been that in its earliest deployments, it can be disruptive to the checkout process. 3-D Secure was commonly implemented as an additional password for payment card users to input when shopping online.
Palo Alto, Calif.-based Simility today unveiled its Adaptive 3-D Secure product as an additional security layer within its e-commerce fraud prevention platform, which uses artificial intelligence and machine learning to narrow its funnel to flag only the riskiest transactions that should be challenged via 3-D Secure to protect online merchants from chargebacks and fraud.
Simility says that by using 3-D Secure as the last step in its heavily layered, constantly adapting system to filter out potential fraud, it’s delivering to merchants the best of what 3-D Secure offers—a solid technology with broad payment industry backing—without the high number of false negatives and friction that have prevented 3-D Secure from catching on broadly with merchants.
3-D Secure also is evolving. EMVCo last fall unveiled a new version, 3-D Secure 2.0, and Simility plans to later integrate the upcoming version into its platform, betting that the streamlined protocol supporting wallets and which may include fingerprint-based biometric authentication, will be more consumer-friendly than the clunky pop-up windows and manual password verifications required with the original 3-D Secure.
“What we saw over the years is that 3-D Secure is a very reliable way to block online fraud, but it challenged too many transactions, which is a bad idea and leads to a lot of checkout friction and cart abandonment,” said Simility CEO Rahul Pangam, who left an executive post at Google in 2014 to launch the company.
To narrow the risk field, Simility developed a robust platform that combines the latest advancements in artificial intelligence and machine learning with device fingerprinting and behavioral analysis to pinpoint the highest-risk e-commerce transactions, greatly reducing the scale of those requiring further investigation, Pangam said.
“Simility pinpoints only high-risk transactions, so instead of checking hundreds of potentially suspicious online purchases, merchants only need to invoke additional security on about 10% of those, and 3-D Secure is a great way to protect the merchant in those cases, and as more e-commerce shifts to mobile, new tools are needed,” he said.
Simility operates globally, selling its fraud-fighting tool directly to e-commerce merchants and payment services providers, including acquirers, payment gateways and financial institutions, Pangam said.