Navigating the 3D Secure Mandates: The Who, What, Where, When, Why, and HowComplex Merchant Profiles

Navigating the 3D Secure Mandates: The Who, What, Where, When, Why, and How


Last Updated on March 22, 2024

The concept of 3D Secure payments (or three-domain secure) may be new to some, but this international mandate is a vitally important factor in the digital payment landscape. Whether you are a small business owner or a high-level executive, understanding what the 3D Secure (3DS) protocol does is fundamental to your success.

In this article, we will take you through these essential elements: who should use 3DS, what it does, where it applies, when and why you need it, and how best to implement 3DS protocols for maximum protection.

Who are 3D Secure Mandates For?

3DS mandates are for any company or entity that processes card-not-present (CNP) transactions, including mobile payments. This includes businesses of all sizes, from small merchants to large financial institutions and ecommerce companies.

All of these entities must adhere to the 3DS protocol in order to ensure that CNP transactions are secure and compliant with international standards.

What are 3D Secure Mandates?

3DS is an authentication protocol designed to enhance the security of online transactions by providing an additional layer of verification for cardholders. It was developed by Visa under the name Verified by Visa and later adopted by other major card networks (i.e. Mastercard, American Express, and Discover).

The 3DS mandates require merchants to implement multi-factor authentication for their online transactions. These mandates are designed to reduce fraud, enhance customer confidence, and ultimately lead to a safer ecommerce environment. The mandates differ across regions, but they all share the same objective of increasing security for online transactions.

Where do 3D Secure Mandates Exist?

The existence and requirements of 3DS vary across different regions and card networks. Some of the key regions where these mandates are in place include:

  • European Union — The PSD2 regulation requires Strong Customer Authentication for most online transactions within the European Economic Area (EEA). 3DS is one of the ways merchants can meet this requirement, making its implementation essential for businesses operating in the region.
  • United Kingdom — Following Brexit, the UK has adopted the SCA requirements of PSD2. This means that merchants in the UK must also comply with 3DS mandates to ensure the security of online transactions.
  • India — The Reserve Bank of India (RBI) mandates the use of 3DS authentication for all online card transactions within the country. Indian merchants must implement the 3DS protocol to comply with this regulation.
  • Latin America — Several countries in Latin America, such as Brazil and Mexico, have adopted 3DS to enhance the security of online transactions. The specific requirements may vary across countries, and merchants should familiarize themselves with the local regulations.
  • Asia-Pacific — The adoption of 3DS in the Asia-Pacific region is diverse, with some countries like (Australia and Singapore) implementing requirements similar to those in the EU and UK. Merchants operating in this region should stay informed about the local regulations and adapt their security measures accordingly.

When do 3D Secure Mandates Apply?

3DS authentication is required for all online card transactions, regardless of the size or type. This includes one-time payments as well as recurring subscriptions and other forms of CNP payments.

The specific requirements may vary depending on the region, but the general rule is that 3DS protocols must be implemented whenever a customer makes an online payment with their credit or debit card.

Why are 3D Secure Mandates in Place?

The primary reason behind implementing 3DS mandates is to combat the growing problem of online fraud. As e-commerce continues to expand, fraudsters are increasingly targeting online transactions, leading to significant financial losses for both merchants and customers. The implementation of 3DS authentication helps to mitigate these risks by adding an extra layer of protection that verifies the legitimacy of cardholders.

More and more governments are implementing laws and regulations to help protect customers’ sensitive information. For instance, in the European Union, the Revised Payment Services Directive (PSD2) necessitates Strong Customer Authentication (SCA) for most online transactions. The 3DS protocol is one of the ways merchants can meet this requirement.

Overall, the implementation of 3DS is to foster consumer trust in the online shopping experience. Customers are more likely to make purchases from merchants who take security seriously, and the adoption of 3DS is a clear indication of a merchant’s commitment to protecting their customers’ financial information.

How Can Merchants Comply with 3D Secure Mandates?

The implementation of 3DS protocols can vary significantly depending on the region. Generally, you will need to go through the following process:

  1. Choose the right 3DS solution — The first step in complying with 3DS mandates is to select a suitable solution for your business. You may choose to implement the protocol directly through your payment gateway or opt for a third-party provider specializing in 3DS services. It is important to choose a solution that supports the latest version of the protocol (3DS 2.0) which offers improved customer experience and better risk-based authentication.
  2. Integrate the solution with your ecommerce platform — Once you have selected the right 3DS solution for your business, you will need to integrate it with your ecommerce platform. This process may differ depending on the platform you are using and the solution you have chosen. Ensure that you follow the integration guidelines provided by your chosen solution provider to ensure seamless and secure authentication.
  3. Inform your customers — As 3DS adds an additional step to the payment process, it is essential to communicate this change to your customers. Inform them about the added security benefits of the 3DS authentication, and provide clear instructions on how to complete the verification steps. This will help to minimize any potential confusion or frustration for your customers during the checkout process.
  4. Monitor and optimize the authentication process — It is important to continuously monitor the authentication process to ensure its effectiveness and minimize any friction during the customer checkout experience. Utilize the available analytics and reporting tools provided by your solution to identify any areas of improvement and make necessary adjustments. Additionally, consider working with your 3DS provider to optimize the authentication process and ensure that only high-risk transactions are subject to more stringent verification steps.
  5. Stay updated on regional mandates — As mentioned earlier, 3DS mandates differ across regions. It is crucial for merchants to stay up-to-date with the latest developments in their operating regions to ensure compliance with all regulatory requirements. Subscribe to industry newsletters, join relevant forums, and maintain open lines of communication with your payment gateway or solution provider to stay informed about any changes to 3DS mandates.

Final Thoughts

The implementation of 3D Secure mandates is an essential step towards securing the rapidly evolving ecommerce landscape. Merchants must be proactive in complying with these mandates to protect their businesses and customers from fraud, build consumer trust, and meet regulatory requirements. By selecting the right 3DS solution, integrating it with their ecommerce platform, and staying updated on regional mandates, merchants can navigate the world of 3DS with ease and confidence.

If you’re feeling overwhelmed or need assistance getting started on your 3DS journey, don’t hesitate to reach out to Nexio today! Our team of experienced professionals can help you select the right 3DS solution and stay compliant with all relevant regulations. With Nexio by your side, you can rest assured that your business is protected and secure in the digital era.

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