Navigating 3D Secure: Trends and Challenges

One of the existential challenges remaining in payments is the need to accurately authorize transactions conducted online. While markets like the EU, UK and India have mandated strong customer authentication for online transactions, the U.S. is the largest market where such stepped-up authentication remains optional. Only a very small portion of eCommerce purchases utilize the 3-D Secure protocol due to lingering concerns about imposing friction and delay on a consumer base that thrives on convenience and fully understands its chargeback rights.

The Payments Performance team at Stripe recently published a blog post noting that in their controlled testing of 3-D Secure, the impact on approval rates was negative compared to running similar transactions without additional authentication. We were surprised by those results and wondered what the card issuing community would make of that counter-intuitive finding.

In this episode of Payments on Fire, we decided to get both sides of the story from two good friends of Glenbrook. Amandeep Batra from Stripe joined us to provide the merchant perspective; Dewald Nolte of Entersekt, a leader provider of 3-D Secure Access Control Server solutions joined us to offer the issuer perspective.