3DS v2 may have arrived quietly in France but it is still making its mark. E-merchants are starting to migrate to this new version of the 3D Secure protocol, but there is still a long way to go. In March 2021, only 7% of transactions were using 3DS v2*. Why the urgent need to move over? Let’s take a closer look at 3DS v2 and its implications for merchants.
What is 3DS v2?
3DS v2 is the new version of 3D Secure v1 – a security protocol designed to tackle money laundering and bank fraud in online transactions. Introduced with PSD2 (Payment Services Directive 2), it will become mandatory for merchants in France from 15 May 2021, although a transition period has been planned up until 2022 during which 3DS v1 and 3DS v2 can coexist.
3DS v2 provides the strong authentication exemptions allowed by PSD2 and therefore continues to offer customer frictionless purchasing processes. Its main feature is that it allows for multiple data to be exchanged with the issuing bank.
3DS v2: a legal obligation
In view of the timetable mentioned below, migrating to 3DSv2 is now urgent. Indeed, if e-merchants don’t make the shift, French banks will automatically apply the “soft decline” mechanism.
A “soft decline” means that the transaction is refused by the customer’s bank. The transaction must then be repeated with strong authentication or it will be lost. The payment service provider can set up an automatic redirection (or “retry”) system so that the payer is returned back to the merchant’s payment page using strong authentication.
Find out more about Dalenys’ soft retry system.
Benefits of 3DS v2
Aside from being legally required, 3DS v2 has benefits for merchants.
1/ It optimises the acceptance rate
There is positive information sharing thanks to this protocol, as it allows issuers to better detect fraudulent behaviour and, in turn, reduce the rejection rate associated with suspected fraud.
2/ It improves the customer experience
The authentication process is better integrated into the purchasing process thanks to its deployment on all channels (mobile, app, digital wallet, connected watches, etc.). The cardholder’s authentication can be done without them taking any action, thereby reducing any friction points during the purchase process.
Adopting 3DS v2 must therefore become a priority for e-retailers to ensure a smooth user experience during the purchasing process, to make transactions secure, and to comply with European standards.
*Source: Natixis Payments. Data relating to BPCE cardholder transactions which account for 20% of transactions in France.