Payments on Fire™ Episode 249 - Two Decades of 3-D Secure: Can Strong Customer Authentication Succeed in the US and Unregulated Markets? with Dewald Nolte, Entersekt and Amandeep Batra, Stripe
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Oct 9, 2024 Dewald Nolte from Entersekt and Amandeep Batra from Stripe dive into the complexities of 3-D Secure in online payments. They discuss the U.S.'s resistance to strong customer authentication despite its benefits for fraud reduction. The conversation highlights the trade-off between consumer convenience and transaction security. They also explore innovative solutions like AI-driven tools and the importance of data sharing between merchants and issuers to bolster transaction trust. Their insights reveal the evolving landscape and ongoing challenges in making online transactions safer.
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3D Secure Chicken and Egg Problem
- US merchants hesitate to use 3D Secure due to conversion rate concerns and issuer uncertainty.
- Issuers lack incentive to invest in 3D Secure due to low adoption and a perception of high-risk transactions.
Low 3D Secure Adoption in the US
- Low 3D Secure adoption (around 3%) creates a biased data set for issuers.
- Issuers mainly see high-risk transactions via 3D Secure, leading to a perception of it as a high-risk channel.
Improving Issuer Risk Assessment
- Merchants should send more diverse transactions through 3D Secure, including lower-risk ones.
- This helps issuers develop a more accurate risk profile and improve decision-making.