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The first commercial implementation of 3-D Secure 2.0, an online fraud-prevention tool, appears to be here. Processor Adyen N.V. announced Friday the launch of its 3DS 2.0 service, claiming it is the first to be available to merchants.
3-D Secure 2.0 is an EMVCo-maintained standard that aims to curb online fraud and prevent the blocking of legitimate transactions. Released in October 2016, the standard uses more data fields than 3-D Secure 1.0.
Unlike 3-D Secure 1.0, the new version can provide merchants with more control over which transactions are designated for further review. Expectations are, too, that merchants will be keener to adopt 3-D Secure 2.0 because it will be less intrusive in the checkout experience than its earlier incarnation was.
Adyen says the updated 3-D Secure also will improve the checkout experience, especially on mobile devices. Adyen said its 3DS 2.0 is capable of authenticating a transaction in the background without customer intervention, “creating a seamless payments experience and helping merchants increase conversion rates.”
3-D Secure 2.0 also incorporates stronger authentication methods, enabling consumers to use biometrics like fingerprints, voice recognition, or facial scans, and text-based two-factor authentication, in a transaction.
Adyen’s iteration of the standard addresses the European Union’s Payment Service Directive 2.0 mandate, a regulation that covers consumer-protection measures for paying online, promoting mobile payments, and cross-border payments.
Adyen says the service automatically determines compliance requirements for each transaction. “The new version also permits global merchants to accept transactions originating in Europe, expanding market opportunities for thousands of businesses,” Adyen says in a statement.
“There’s no doubt that PSD2 and 3DS 2.0 represent a significant challenge for merchants, but they also create opportunities. To help capitalize on the opportunities, our 3DS 2.0 solution works universally as a central authentication solution for merchants who work with various partners across the world,” Brian Dammeir, Adyen head of product, said in the statement.
Adyen’s move is welcomed. “It’s good news that we have a merchant processor up and running on 3DS 2.0—there were a few delays in getting the certification process up and running, so this is an important milestone to finally seeing live 3DS 2.0 transactions,” Julie Conroy, research director at Boston-based Aite Group, tells Digital Transactions News in an email.
“3DS 2.0 provides a significantly enhanced data stream; the merchant has the ability to send over 150 data elements about the transaction vs. just 15 or so in 3DS 1.0,” Conroy says. “This provides issuers a lot more data to inform their decision, and represents the potential to not only reduce fraud, but also reduce false declines (which are more concerning than fraud for many of the merchants I speak with).”
The PSD2 aspect is important, too. “In the European market, where Adyen is particularly strong, many issuers and merchants are looking to 3DS 2.0 as their path to compliance with the upcoming PSD2 Strong Customer Authentication requirement, and the mobile-friendly enhancements in 3DS 2.0 will also be important to a more seamless customer experience,” she says.
Adyen noted its first-half volume from North America doubled to $25.6 billion from a year ago. Visa Inc. expects 3-D Secure 2.0 compliance to begin in April 2019.
