3D Secure, also known as 3DS or 3D secure authentication, is a technical standard used to verify the cardholder’s identity and make sure the transaction is legitimate. Retailers use this solution to check whether the purchase is completed by a genuine cardholder or not.
The parties involved in the payer authentication process are:
- the credit card issuer (it can be MasterCard, Visa or AmEx)
- the payment provider that offers the 3DS solution to retailers (such as Tranzzo)
- the acquirer (the merchant’s bank)
The security protocol was launched in 2001, and since then gained popularity among merchants. When exploiting 3DS, card data is highly-protected, so retailers tend to add this feature to their websites straight off the bat.
Visa was the first credit card issuer that rolled out the 3D security protocol, that’s why it is called “Verified By Visa”. Other networks have also come up with their authentication systems based on 3D Secure. MasterCard branded it as “MasterCard SecureCode”, American Express – “American Express SafeKey”.
When service providers add this verification step, they offer one more layer of the transaction protection. That contributes to the higher conversion rate and lower chargeback ratio.