Navigating frictionless 3D Secure for enterprise merchants

Digital commerce is evolving fast, creating many opportunities for growth. However, this accelerating shift to online transactions has also led to a significant rise in fraud. For enterprise merchants, the challenge lies in striking the balance between securing transactions and preserving a seamless customer experience.

During a recent roundtable with merchants, Rakesh Kanakavalli from Worldpay and Mark Dobinson from Visa tackled this crucial topic: how enterprises can implement and optimise 3D Secure to enhance the safety of online credit and debit card transactions. They also explored new processes that can boost approval rates with minimal friction.

While 3DS has the potential to provide an additional layer of fraud prevention, many merchants have struggled to unlock its full value due to the perceived or real hurdles it introduces.

Previously we identified some of the key benefits of the new versions of EMV 3DS here: 5 Benefits Of 3D Secure 2 Authentication | Insights | Worldpay. In this article, we will explore the challenges surrounding 3DS, offer expert insights and highlight solutions tailored for the complexities of authentication.

Key challenges when implementing 3DS

While 3DS effectively reduces fraud, provides liability shifts and improves authorisation rates, its widespread adoption among enterprise merchants, especially in North America, has been hindered by several pain points.

1. Added friction leads to cart abandonment

Traditional implementations of 3DS have the potential to introduce friction during the checkout process. Customers may encounter additional authentication screens or delays, which can disrupt the seamless transaction flow. For merchants, this often translates into a loss of sales due to abandoned carts.

2. Low approval rates from issuers

North American issuers maintain varying preferences regarding 3DS, and some have been slow to adapt. This inconsistency has resulted in subpar approval rates for transactions involving 3DS, leaving merchants hesitant to rely on the system for fear of reduced conversions.

3. Ineffective use of 3DS for high-risk transactions only

Many merchants use 3DS solely for high-risk transactions to achieve liability shift. While this approach seems logical on the surface, it often yields biased data that impacts the predictive risk models of issuers. This misalignment can lead to unfavorable payment outcomes and degrade overall transaction performance.

The question, then, is how do enterprise merchants address these challenges without compromising on security or user experience?

Strategic innovations for seamless authentication

Effectively navigating 3DS requires a strategic approach. Leveraging innovation and advanced tools can transform 3DS from a pain point into a seamless and powerful solution. Here's how enterprise merchants can reimagine their authentication strategies:

Leverage AI for smarter decisions

Instead of applying 3DS solely to high-risk transactions or indiscriminately across all transactions, merchants should consider a dynamic approach powered by artificial intelligence. Kanakavalli shared that “since issuer preferences change dynamically, AI algorithms can evaluate issuer preferences and transaction data in real-time, helping merchants determine which transactions should undergo 3DS.” By tailoring the deployment of 3DS, merchants can simultaneously protect their business and maximize conversion rates.

Combine 3DS with tokenisation for higher approval rates

Merchants who combine 3DS with tokenisation stand to benefit significantly. Tokenisation enhances security by encrypting cardholder data, while 3DS adds another layer of authentication. Together, they boost approval rates while providing a frictionless checkout experience for customers.

Leverage data-only feature for frictionless authentication

For merchants concerned about friction, data-only 3DS can be a game-changer. This feature allows merchants to share rich transaction data with issuers without introducing additional steps for the customer. By enabling issuers to perform more robust risk analyses, data-only 3DS improves authorisation rates while maintaining a seamless customer experience.

With data-only, there is no liability shift but its usage adds benefit to dispute management with Compelling Evidence (CE 3.0). “The data-only capability has been such a success in North America and Latam, Visa is now rolling it out globally,” Dobinson said.

By addressing these areas with focused strategies, merchants can unlock 3DS’s potential as a secure and frictionless tool, benefiting customers and business outcomes alike.

The authentication solution enterprise merchants need

At Worldpay, we understand the unique challenges enterprise merchants face when implementing authentication and fraud prevention measures like 3DS. That's why we’ve developed tailored solutions designed to optimise performance without compromising security.

Introducing 3DS Flex Service

Our 3DS Flex Service empowers merchants by addressing the key challenges associated with 3DS implementation:

• Support for PAN and network payment tokens: Perform 3DS transactions seamlessly, even with tokenized cardholder data.
• Data-only capabilities: Maintain a frictionless customer experience while providing issuers with the rich data needed for enhanced authorisation rates.

AI-powered authentication optimisation

With our Authentication Optimisation Service, merchants no longer need to choose between security and usability. This AI-driven solution evaluates every transaction in real-time to determine whether 3DS is necessary. By automating decisions based on multiple data points and issuer preferences, we eliminate guesswork and enable merchants to focus on growing their business.

These solutions make 3DS a powerful, turnkey tool for enterprise merchants, improving payment outcomes while ensuring a frictionless experience for customers.

Transform authentication into your strength

The challenges of implementing 3DS can be real, but when implemented correctly the benefits are strong. With the right tools and strategies, enterprise merchants can redefine authentication as a seamless and secure process. By leveraging AI-driven optimisation, tokenisation, and data-only features, merchants can significantly enhance approval rates, reduce friction, and improve overall customer satisfaction.

At Worldpay, we're dedicated to helping enterprise businesses make this transformation. Our 3DS Flex Service and Authentication Optimisation Service were designed with your needs in mind, offering both simplicity and sophistication.

Are you ready to unlock the full potential of 3DS for your business? Our experts are here to help. Contact us today to learn more about our solutions and how we can support your path to frictionless authentication.