It's well accepted that the earliest version of 3-D Secure was off-putting to merchants and consumers who didn't like how it added friction to the checkout process in the interest of online security. The new version of 3-D Secure wants to avoid the same pitfall, and merchants are cautiously optimistic.
New survey data from CardinalCommerce finds merchants are hopeful that the designers of 3-D Secure 2.0 fixed a lot of these problems, but it remains to be seen how many will adopt it. More than half, or 52% of respondents said they would be likely to CardinalCommerce's own Consumer Authentication service next year when includes 3-D Secure 2.0, while 48% said they would be unlikely to use it, or had no opinion.
“Merchants indicated very specific preferences for features built into the new 3-D Secure that will make it more user-friendly, which suggests there's a lot of interest,” said Tara Lavelle, CardinalCommerce’s senior vice president of marketing.
The original version of 3-D Secure, introduced 15 years ago to fight e-commerce fraud, typically required consumers to provide an additional password to use their payment card during checkout. Merchants complained about many false positives and aborted transactions, negating 3-D Secure's benefits of blocking fraud and shifting liability for chargebacks.
The developers at EMVCo went back to the drawing board and finalized new specifications for 3-D Secure 2.0 last year to eliminate much of that friction by making the consumer verification process more streamlined, with more merchant control over declines. Card issuers are working now to implement the new version for merchants during the second half of this year.
To gauge industry interest in 3-D Secure 2.0, payment authentication provider CardinalCommerce asked hundreds of payments industry professionals about their expectations for the updated tool.
Nearly half, or 46% of respondents, said the most important feature needed in the 3-D Secure is an intuitive consumer interface that won't interrupt the consumer shopping experience unnecessarily. About one in five merchants surveyed said they want 3-D Secure to provide more data points to make nuanced decisions about suspicious transactions, and 18% said they want the new version to support in-app, mobile and non-browser purchases, reflecting the rise in mobile e-commerce.
What’s least important to merchants considering 3-D Secure 2.0 is support for specialized types of transactions, including proprietary extensions for different country and regulatory requirements. More than a third, or 37%, of survey respondents ranked those considerations as least vital for 3-D Secure.
CardinalCommerce conducted its survey in October and November of 2016 among hundreds of participants including merchants, fraud and e-commerce vendors, card issuers and card associations.
CardinalCommerce currently supports 3-D Secure’s earlier version as part of its Cardinal Consumer Authentication e-commerce fraud prevention service, and the company plans to upgrade participating clients to 3-D Secure 2.0 it becomes widely available, Lavelle said.
Globally, 41% of merchants and 54% of organizations overall use or support consumer authentication programs, up from 49% of all organizations who said they supported it last year, according to the survey data.
Cardinal's own payment verification service, Consumer Authentication, which leverages existing 3-D Secure protocols, continues to be most popular outside the U.S. More than 57% of merchants participating in the survey in Africa use it, compared with 50% in Eastern Europe and the Middle East; 49% in Europe; 48% in South America and 39% in both North America and the Asia Pacific region.
Verified by Visa and Mastercard SecureCode, which are both based on 3-D Secure, are far and away the most popular consumer authentication methods merchants are using today, at 84% and 78%, respectively, according to the survey. Other methods include device verification directly from the merchant and Facebook logins, at 25% each, followed by email verification (22%), with declining numbers of other methods down to online PIN debit and American Express SafeKey at 3% each, according to the survey.
Visa Inc. finalized its purchase of CardinalCommerce early this year for an undisclosed amount, and though the companies continue to operate separately, they’re working toward similar objectives in helping to develop broad merchant access for 3-D Secure, according to Lavelle.
“We’re starting to make strategic plans for how CardinalCommerce meshes with Visa’s operations, but nothing has fundamentally changed and we continue to support all networks brands including Mastercard, American Express and Discover,” Lavelle said.