Blankfactor’s proven expertise in payments can help merchants, large and small, with 3-D Secure 2.0 (3DS) compliance through consulting, technical implementation, and custom software solutions. 3DS meets the Strong Customer Authentication (SCA) requirements going into effect in Europe next year. Merchants who are not compliant with SCA risk having transactions blocked by the card issuer, resulting in frustrated customers and loss of business.
What is Strong Customer Authentication?
Strong Customer Authentication (SCA) is a set of requirements introduced by the EU Revised Directive on Payment Services (PSD2). It requires payment service providers within the European Economic Area to comply with SCA by January 1, 2020 (September 14, 2021 for the U.K.).
SCA is a multi-factor authentication based on the use of two or more elements categories as possession, inherence, and knowledge. These categories are independent from each other, so that the breach of one form of authentication does not compromise the reliability of the others. SCA is designed to protect the confidentiality of the authentication data.
Possession
Something the customer owns such as a cellphone, a hardware token, etc.
Inherance
Something inherent to tha customer; for instance, biometrics.
Knowledge
Something the customer knows. For example a passcode or passphrase.
When is Strong Customer Authentication required?
The more robust authentication requirements have increased the need for innovation in card-not-present transactions for merchants, card issuers, and payment service providers.
Payment service providers are required to use SCA when a payer accesses online accounts, initiates electronic payments, and/or carries out remote actions that imply risk.
-
1Accessing payment account online
-
2Initiating electronic payment transactions
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3Carrying out remote actions through channels which may imply a risk
The impact of declined transactions
32
%
Users would not return to a retailer if declined
Source: Nudata Security
66
%
of mobile transactions had cart abandonment
3-D Secure 2.0:
An European requirement with worldwide opportunity
New vs. old
3DS 1.0
Standards
3DS 2.0
Standards
Benefits of
3DS 2.0
Method
Static passwords, security
questions and risk-based
authentication
Eliminates static passwords
for stronger two-factor
authentication
- Greater security
- Greater convenience
Interfaces
Browser dependent
Supports different
payment channels
(in-app, IoT, browser, etc.)
- Better UX
- Great control by merchant
- Wider applications
Data
Only 15 data elements available
Enables 10x more data
to be exchanged
- Increased accuracy
- Improved decisioning
Use cases
Supports guest checkout only
Supports guest checkout with additional use cases (wallets, tokenization, etc.)
- Expanded use
- Greater security
Decisioning
Merchants bound by issuer decisioning
Enhances decisioning by
increased flow of data
- Greater flexibility
Stronger authentication
3-DS 2.0 has the ability for merchants to share up to 150 data points, including cardholder’s key addresses, browser language, location data, etc. The more data shared between merchants and issuers, the better the fraud assessments will be, thus further reducing the rate of false declines.
Better customer experience
3-DS 1.0 required a static password. If a cardholder couldn’t remember their password, this often led to cart abandonment. 3-DS 2.0 is optimized to work across platforms (web, mobile, IoT) and uses familiar authenticators suchs as biometrics and one-time-passwords to verify risky transactions.
Multiple device support
Smartphones didn’t exist when 3-DS 1.0 was released. 3-DS 2.0 is optimized to work across platforms such as web, mobile, IoT and allows for in-app purchases and digital wallet payments.
Merchant opt-out
Merchants who enrolled in 3-DS 1.0 were bound to the issuer decision whether a charge was accepted or not. With 3-DS 2.0, merchants are able to opt-out of the authentication process and use their own risk models to approve or deny a sale. If merchants choose to do so, however, they will assume the liability of a fraudulent transaction.
What we can do
Consulting on available solutions
Our team is at the forefront of digital payments. We can help you navigate the complex regulations and vast technology options available on the market.
Implementing new protocols
As industry experts in SCA and 3-D Secure, we can help upgrade your current payment platforms to ensure compliance.
Creating custom payment software
Your business is unique, our expert engineers and designers can help you build a custom solution built specifically for your business.
