3DS Payment Gateway

What is a 3DS payment gateway?

A three domain server (3DS) payment gateway is a type of credit and debit card payment system that provides fraud protection and additional security in card-not-present payment situations.

Using payment gateway software, 3DS systems let the cardholder verify their identity using the merchant’s bank account, the customer’s bank account, and the card payment network. 

In most cases, a password created with the customer’s bank, a one-time code sent to their mobile device, or a correct answer to a security question is necessary for purchase approval.

Basic elements of 3DS payment gateways

Because 3DS gateways require approval from three separate service providers, the steps involved are more complex than a simple 2D gateway. A secure payment with 3DS needs to:

• Collect the customer’s card information. Whether online or at a vendor’s point of sale (POS) system, customers must enter their information into the system for payment processing.
• Run checks via the card network. The system confirms whether the card is registered with a 3DS secure network.
• Redirect to a secure processor. Once 3DS registration is confirmed, the card details have to be passed to a secure payment processor via the card network provider.
• Input customer identity verification. The customer gives additional verification like a one-time password (OTP) or authentication code.
• Redirect to the merchant. Once verification is complete, the card network passes the information back to the merchant’s website or POS to complete the transaction.
• Confirm the payment. The customer receives confirmation of their approval, and the merchant receives the money.

Benefits of 3DS payment gateways

Providing customers with a more secure way to complete payments online and in person is the best solution for everyone involved. The benefits that come with 3DS payment gateways include the following.

• Payments are less susceptible to fraud. Added safety is the biggest benefit of using these 3DS gateways. While the extra steps may be frustrating at times, in most instances, customers are glad for the extra protection during checkout.
• There are fewer chargebacks to merchants. 3DS also minimizes liability for merchants should a fraudulent charge occur because the issuing bank becomes responsible for verifying the cardholder’s identity. This means fewer financial losses for business owners if cardholders dispute a transaction.
• Customers are more likely to complete transactions. If a credit or debit card is declined at checkout, customers are more likely to abandon their online carts rather than use an alternative payment option. With greater identity verification, it’s less probable that a genuine transaction will be denied, allowing customers to complete their purchases.
• Businesses have enhanced compliance for payment processing. With the latest versions of 3DS technology, businesses fulfill regulatory compliance requirements for processing and storing customer card details. Should these details end up being used illegally, companies that are compliant face lower legal liabilities.
• Customers experience faster authentication with 3DS 2.0. Newer versions of 3DS payment gateways use faster methods of verification via their card networks. Merchant platforms only run additional checks if the card is flagged as high risk, making the process fast and invisible to the cardholder.

Best practices for 3DS payment gateways

With recent updates to 3DS software, merchants no longer need to choose between offering increased fraud protection and increased sales. To get this level of security with 3DS, business owners should:

• Use biometric data for cardholder verification. Instead of customers needing to use OTPs, fingerprints or facial recognition are better solutions for providing quick identity verification. It’s also a safer option for the cardholder.
• Accept cardless payment options at checkout. Wearables and digital wallets are steadily becoming the norm. Many of them have card encryption for every transaction, making the overall checkout process more secure. Businesses supporting these payment options see elevated sales and customer satisfaction over those not.

3DS payment gateways vs. 2D payment gateways

Using 3DS payment gateways is one of the most dependable forms of payment processing for merchants and customers. 2D payment gateways have the fastest payment options, but they’re significantly less secure. They don’t require additional details beyond the card number, expiration date, and card verification value (CVV) number.

Grow online sales using e-commerce platforms that support 3DS payment gateways to improve the shopping experience for your customers.