Report: 3D Secure Not Always ‘Conversion Killer’

Jan. 13, 2014

masterpass-eur Since its introduction, the 3D Secure method of authenticating cardholders online has been acknowledged as a very effective tactic to reduce card-not-present fraud. Unfortunately, it has been universally rejected by retailers as a “conversion killer.” In certain situations, however, not only is 3D Secure an effective security measure, it actually increases conversion, according to a new report from Dutch e-commerce acquirer and processor, Adyen.

The conventional thinking about 3D Secure actually holds true in the U.S. and other countries like Brazil, France and Germany, Adyen found. Conversion is negatively affected by the technology when retailers in those countries have tried it. There are places in the world, however, including important e-commerce markets like the U.K., India and Russia where conversion numbers indicate that consumers find real comfort in the presence of 3D Secure and that conversion suffers when it is not used. The conclusion is counterintuitive, Roelant Prins, CCO of Adyen, told, but the data is conclusive.

“It’s not just in the U.S. where the prevailing wisdom regarding 3D Secure is regarded as fact,” he said. “I speak to a lot of people in the U.K. who find it very hard to believe, but It’s happening.”

In India, conversion is nearly 30 percent higher for transactions on sites that feature 3D Secure. In the U.K., Adyen found the lift with 3D Secure to be lower at 2.5 percent, but still positive. In Brazil, on the other hand, conversion rates drop 55 percent when consumers encounter 3D Secure. Conversion in the U.S. and China falls by 43 percent on sites with 3D Secure.

To assist cross-border e-commerce merchants, Prins said Adyen has developed a feature that can essentially turn 3D Secure on and off, depending on what geography a transaction is originating from and according to other factors.

“The reality is that merchants should consider a segmented approach based on factual data when it comes to implementing 3D Secure,” Prins said. “Adyen’s Dynamic 3D Secure feature allows merchants to take a more flexible approach to payments, leveraging factual data to mitigate fraud risks and increase sales.”