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3D Secure, or 3DS, is a technical standard that adds a layer of security in online credit and debit card transactions, protecting the buyer’s against unauthorised use. During the checkout process, if the cardholder is enrolled in 3D Secure, the issuing bank will decide whether the cardholder’s identity can be verified using data supplied regarding the cardholder and their device, or if an additional authentication process is necessary. If additional authentication is necessary, a process provided by the issuing bank will begin to verify the cardholder’s identity via SMS one-time passcode, the issuing bank’s mobile app, biometric methods, or other means. One of the main advantages of the protocol is the shift in liability of fraudulent chargebacks. If the transaction was authenticated, the liability of the transaction shifts from the merchant to the issuer.
Unlike the 3DS 1.0, 3DS 2.0 simplifies the payment process by providing a larger set of cardholder information to the issuer, allowing for improved risk assessment and the ability to skip authentication challenge processes altogether for low risk transactions, leading to lower abandonment rates and better user experience.