With 3DS2 payments, the authentication process is embedded in the checkout flow. This creates a more frictionless experience compared to the original 3DS.
Whenever a customer makes a 3DS2 payment, businesses and payment providers can send more than 150 data points that help the issuing bank assess the payment risk level. This includes data on the customer's shipping address, device, and payment history. The process takes place in the background of the web or mobile checkout flow.
After the data is submitted, the issuing bank chooses to authenticate the payment or ask for more information. Here two things can happen, which are:
If the issuing bank authenticates the payment immediately, it is called the frictionless flow.
If more information is required, it is known as the challenge flow.
Frictionless authentication flow
If the issuing bank has enough data about the customer making a payment, it will qualify for frictionless authentication. This is the most significant difference when comparing 3DS vs 3DS2, as it means an issuer can approve a transaction without the cardholder having to input more information.
Better customer experience
Unlike the original 3DS, the 3D Secure 2 protocol is responsive to many devices, including smartphones and tablets. This means it works seamlessly with mobile banking apps to create a frictionless experience.
Less friction during challenge flow
In most cases, 3DS2 allows a cardholder to authenticate a challenge flow payment through their banking app using biometric authentication (such as a fingerprint or facial scan). This is sometimes known as ‘out-of-band authentication’.
3DS2 also helps to embed the challenge information request within the checkout flow itself. This means that cardholders are not redirected to another site to authenticate the payment, reducing friction and the possibility of cart abandonments.
Liability shift
Using 3DS and 3DS2 payments also helps you to reduce the risk of losing money through chargebacks.
Using 3DS2 means the liability for fraud-related chargebacks shifts from your business to your issuing bank. Though there are a few exceptions to this rule, in Europe almost all online payments using 3DS2 activate this liability shift. However, It doesn’t apply to non-fraud related chargeback reasons, such as goods not being delivered.
