As online transactions grow and personal information stolen in data breaches proliferates, accurately authenticating the identity of online shoppers has become more important than ever for merchants. Visa on Tuesday announced plans to support 3D Secure 2.0, the evolution of a decade-old authentication technology many merchants have been leery of using.
While the original version of 3D Secure (3DS) was an effective way for issuers to authenticate users with an additional username and password during card-not-present transactions, merchants worried that the extra steps added to online checkout negatively affected conversion rates. As a result, adoption, especially in the U.S., has been low. The new version will incorporate enhanced risk decisioning enabling merchants to leverage 3DS only for the riskiest transactions.
It’s not surprising that the Visa announcement originated from its London office as 3DS use in Europe—where it was mandated by many governments—is more prevalent.
“By helping to lead the development of 3DS 2.0, we are able to offer an enhanced authentication service that makes these payments both faster and more secure,” said Mike Lemberger, senior vice president of product solutions in Europe for Visa. “For European retailers, this helps address the ongoing challenge of reducing cart abandonment in an e-commerce market. This update also provides all the necessary tools to ensure PSD2 compliance for card payments—a major benefit which should not be underestimated.”
In December, Visa acquired CardinalCommerce, a Cleveland-based company instrumental in the development of 3DS 2.0 and risk-based authentication. At the time, it was hailed as a sign of commitment from Visa—and perhaps the other card networks—to stronger online authentication and could stimulate adoption of 3DS 2.0 in the U.S.