3D Secure (3DS2) for Merchants: Pros, Cons, and Setup Guide

When people make debit card and credit card transactions, there are security protocols in place to protect merchants and consumers. These additional layers of security are essential in preventing fraud and securing transactions. 3D Secure is a type of security protocol. Created by Arcot Systems, which has since changed its name to CA Technologies, it was first utilized by Visa to improve security on internet payments.

When people see programs like Verified by Visa, MasterCard SecureCode, American Express SafeKey, and J/Secure, they see programs and security services that are based on 3D Secure.

How Does 3D Secure Work?

3D Secure is a three-domain model that is utilized to provide another level of secure authentication between the online authorization process and the financial authorization process.

The first domain used to provide this security is the Acquirer Domain. This is the bank and the merchant receiving the transaction payment. The second domain is called the Issuer Domain, which is the bank that issued the debit card or credit card that was used for the transaction. The third domain is called the Interoperability Domain. This domain is the infrastructure provided for the card, which is used to support the 3D Secure protocol.

Using XML messaging and SSL communications to authenticate and secure transactions, 3D Secure uses a number of different processes. Understanding how 3D Secure impacts the customer transaction process is essential for merchants. When a customer completes their checkout process; they will be prompted to enter their MasterCard SecureCode or their Verified by Visa code if they are using either of these credit cards. After entering the code, the customer gets directed to the issuer’s website to authorize the payment. Sometimes this authorization is completed within your payment solution.

Customers that are using Discover Card, American Express, or gift cards are not prompted to enter a password. As a merchant, you have the ability to decide which transactions require 3D Secure authentication. You can choose to have certain high-risk transactions utilize 3DS, and you can opt-out for other transactions if you choose.

The Benefits To Using 3D Secure

There are numerous benefits to utilizing 3DS that merchants can take advantage of. First off, 3DS can help prevent chargebacks. When using Verified by Visa, for example, you are guaranteed to never receive a chargeback. You can protect yourself from friendly fraud, or chargeback fraud, by using the service. It is important to note that MasterCard does not have a similar policy, however.

Also, a liability shift occurs when using 3D Secure. In most cases, a merchant is typically liable for chargeback transactions. The liability gets shifted to your issuing bank when you utilize 3D Secure. Make sure to review the documentation provided by your issuer to make sure you understand both the regulations and the rules regarding the implementation of 3D Secure.

Interchange benefits also exist when utilizing 3D Secure. In some cases, merchants can access lower interchange fees. They could also benefit from longer payment terms with their acquirer. Customer confidence is another important benefit to 3D Secure. Customers that know there is an additional layer of security in place to protect their data and may be more confident in their purchases.

How To Implement 3D Secure In Your Payment Gateway

Implementing 3D Secure does not need to be complicated. Many payment gateways, including MobiusPay’s, already support the latest 3D Secure protocols. To get started, follow these simple steps:

Step 1: Confirm with your payment processor or acquiring bank that 3D Secure (or EMV 3DS) is supported for your merchant account.

Step 2: Configure your payment gateway to enable 3D Secure for online transactions. Many merchants choose to activate it only for higher-risk or international payments.

Step 3: Test the integration by running a few low-value transactions through your gateway’s sandbox or test environment.

Step 4: Review the results and verify that authentication requests and approvals are being processed correctly.

Step 5: Once live, monitor your chargeback data and fraud reports to see how much 3D Secure improves your protection.

Merchants that process a high volume of card-not-present transactions, or who operate in industries with elevated chargeback risk, will benefit the most from full 3D Secure implementation. Working with a processor that understands these requirements ensures smooth integration and reliable performance.

Understanding 3D Secure 2.0 (3DS2)

While the original 3D Secure protocol provided valuable protection, it was sometimes criticized for its clunky user experience. To address these challenges, the card networks introduced 3D Secure 2.0 (also called EMV 3DS). The goal of 3DS2 is to maintain strong authentication while making the process faster and more seamless for customers.

3DS2 supports new technologies such as biometric verification and frictionless authentication, which allow low-risk transactions to be approved instantly without extra customer steps. It also improves compatibility with mobile apps and digital wallets, reducing checkout friction and cart abandonment.

Feature	3D Secure 1.0	3D Secure 2.0 (EMV 3DS)
Authentication	Password-based (static codes)	Biometric, token, or one-time passcodes
User Experience	Redirects to issuer’s website	Embedded or in-app authentication
Risk Assessment	Limited	AI-driven risk scoring and contextual data
Liability Shift	Yes	Yes (same benefit for merchants)
Best Use Case	Desktop eCommerce	Mobile, app-based, and cross-border payments

For merchants, the shift to 3DS2 offers a balance between fraud prevention and customer convenience. The improved protocol helps increase completed sales while maintaining the same liability protection benefits of the original version.

Should I Inform My Customers About 3D Secure?

Many businesses choose to inform their customers that they are using 3D Secure to bring extra protection to them. Customers want to be assured that their data is secure, as well as their transactions. They do not like extra confirmation steps and passwords. Due to these things, informing them that you are using 3DS is essential.

Reminding customers that they are getting extra security with no additional fee in the transaction is essential. By providing a link to customers that points them to more information about the program, and by also displaying the MasterCard SecureCode and Verified by Visa logos, customers will feel more confident about their purchase and understand that the systems are in place to protect them.

Learning More About 3D Secure

If you have questions about 3D Secure, contact MobiusPay and speak with the team. The professionals at MobiusPay can give you the information you need to make an educated decision about using the program. Also, make sure to read the documentation that is provided to you by your credit card issuer. If you have questions, your credit card issuer can also help answer them.

Paying attention to the future of password authentication, as well as new device technology that is coming, allows you to keep up with the latest developments, as well as what is to come. Make sure your business and customers are well protected from fraudulent activity and malicious behavior by utilizing 3D Secure. Having excellent services all the way up your payment ecosystem is essential to creating positive customer experiences and cultivating return business and higher revenue. 3D Secure can help you reduce chargebacks and increase customer confidence.

Frequently Asked Questions About 3D Secure

What is 3D Secure (3DS)?
3D Secure is a security protocol that adds an additional layer of authentication to online card transactions. It verifies that the cardholder is authorized to use the card before completing payment.

Is 3D Secure required for merchants in the United States?
3D Secure is not mandatory in the U.S., but it is strongly recommended. Many international jurisdictions, especially in Europe, require it under PSD2 regulations. U.S. merchants that process transactions globally often enable 3DS for added protection.

What is the difference between 3D Secure 1.0 and 2.0?
3DS2 offers a more modern experience, supporting biometric and in-app authentication. It reduces friction for customers while maintaining strong fraud prevention measures.

Does 3D Secure prevent chargebacks?
3D Secure significantly reduces chargebacks caused by fraud or unauthorized use. When 3DS authentication is completed, liability for fraudulent transactions usually shifts from the merchant to the card issuer.

How can I add 3D Secure to my payment gateway?
Work with your payment processor or gateway provider, such as MobiusPay, to enable 3D Secure. Integration can often be done quickly with minimal development effort.

 

 

 

 

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