3D Secure: protecting online sales during COVID-19

3D Secure protects online shoppers

The COVID-19 pandemic is accelerating the shift to digital channels. According to Marqeta’s recent State of Payments Report, 63% of consumers planned to do most of their holiday shopping online, vs. only 43% last year.

But with more sales moving online, there are plenty of opportunities for fraudsters to steal payment credentials, diluting the trust of cardholders and increasing losses for merchants and card issuers. At least one in four of U.S. online customers have already been targeted by COVID-19-related fraud, according to data from TransUnion. Phishing is the most common channel, whereby fraudsters pretend to be a trusted organization to solicit personal data, account login, and card payment details, and then use those details to make fraudulent purchases online.

3D Secure: Are you who you say you are?

How can card issuers prevent their cards from being misused? Three-Domain (3D) Secure is an online payment protocol between merchants, the card networks, and card issuers that can help verify the identity of a cardholder prior to authorizing a transaction.

At its core, 3D Secure asks an online shopper: Are you who you say you are? Users prove their identity through authentication methods such as one-time passcodes or by biometrically using their fingerprint on their phone before the merchant moves forward with the authorization request. For a low-risk transaction, there’s also flexibility to authenticate the user in the background (the merchant sends hundreds of data points about the transaction to the issuer), without requiring additional steps from the cardholder, which can help reduce potential drop-off during checkout.

In Europe, 3D Secure can help meet the requirements of Strong Customer Authentication under the Payments Service Directive 2 (PSD2) which is set to be enforced in 2021. And while the U.S. is not regulated by this directive, Marqeta has seen a rise in 3DS requests from U.S. based merchants as a way to combat fraud and shift liability.

Protect your transactions with Marqeta’s flexible 3D Secure solution.

COVID-19 has accelerated the shift to online commerce — and the threat of fraud is here to stay. Card issuers need to be prepared whether their region is regulated or not. As a modern card issuer processor, Marqeta provides multiple options for card programs to enable 3D Secure depending on the desired level of control. Our Delegated decisioning option can call out to your systems, allowing you to make risk decisions on whether to authenticate the cardholder using your own custom logic, giving you unprecedented control over the user experience. This option is now generally available to customers in all regions Marqeta operates.

Read more about Marqeta’s 3D Secure solution and view our API Guide.

Read about Marqeta’s announcement of its 3D Secure solution here.