Real-time cardholder identity authentication decreases online fraud and chargebacks while ensuring a frictionless checkout experience
Cardknox, a leading developer-friendly, omnichannel payment gateway, today announced its support for 3-D Secure 2.0 (3DS2) technology, a next-generation e-commerce payment security protocol developed by EMVco. 3DS2 authenticates cardholder identities in real-time during the checkout process, which reduces fraud and chargebacks without compromising on the checkout experience. This technology is now available through a Cardknox gateway e-commerce integration, as well as with PaymentSITE, Cardknox’s customizable online payment form.
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Benefits of 3-D Secure 2.0 technology include:
- Robust, risk-based authentication that uses a greater number of data points than the original 3DS
- Reduced friction and accelerated checkout process
- Embedded authentication process without redirects that slow down checkout
- Increased sales due to fewer abandoned shopping carts
- Reduced fraud and chargebacks
To facilitate 3DS2 for merchants, the Cardknox payment gateway passes along customer- and transaction-specific data points to the cardholder’s issuing bank. The bank is then able to evaluate the risk of fraud without the use of redirects within the checkout flow that require the cardholders’ involvement. If the bank successfully verifies the customer’s identity and decides that the transaction poses a low fraud risk, then they authorize the transaction. In the unlikely event that the bank is unable to authenticate the cardholder’s identity with the provided data points, the cardholder may be prompted to enter their preset password for verification purposes.
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3DS2 improves upon the original 3DS technology by collecting and cross-referencing 10x more data points during authentication than before — which filters out fraud and verifies the cardholder’s active participation in the sale. As a result, merchants will see a decrease not only in fraudulent transactions but also in friendly fraud chargebacks — a practice in which a customer disputes a legitimate transaction in order to get their money back.
3DS2 technology was created in response to the growing number of card-not-present transactions that occur primarily online. E-commerce fraud is expected to surpass $20 billion in 2021, a Juniper Research report found, with liability often falling on the individual merchant. This loss would represent an 18% increase, compared to the $17.5 billion recorded last year.
“Online fraud and chargebacks hurt the e-commerce merchant ecosystem,” says Mark Paley, VP of Sales at Cardknox. “With support for 3DS2, merchants can reduce their liability for fraud while providing a more seamless, frictionless checkout experience for their customers. At a time when e-commerce is surging, we’re pleased to have added this latest technology to our extensive lineup of e-commerce features.”