Selling online? How to make 3-D Secure work for you

3-D Secure, the security system for online credit card sales, can help to prevent fraud.

October 1, 2013

3-D Secure, the security system for online credit card sales, can help to prevent fraud – and, says PayGate MD Peter Harvey, there are some simple steps merchants can take to ensure they don’t lose sales because of buyer fears.

“Online retailers are very vulnerable to credit card fraud, especially if they’re selling virtual goods like vouchers or software, or anything they have to ship rapidly,” says Harvey. “If the cardholder later claims their details were stolen and requests a chargeback, the merchant has to swallow the loss.”

Harvey says that by making cardholders enter an extra password or one-time PIN before they can complete a purchase, ‘3-D protects’ merchants. “This gives online retailers the same protection a physical store enjoys when customers have to enter the PIN at the till,” he says. “And it’s free – every online merchant should be using it.”

What is holding some people back, says Harvey, is the fear of lost sales. “Even though 3-D Secure has been around for a while, it still results in 15-20% lower sales. That obviously includes fraudsters who had to abandon their attempts, so part of it is good news. But even a 5-10% loss of genuine sales hurts.”

Fortunately, says Harvey, there are some simple steps merchants can take to reduce the losses. “When customers abandon a purchase at the last hurdle, it’s often because they aren’t very familiar with 3-D Secure, and the sudden introduction of a new step in the process makes them suspicious. The best way to combat confusion is with better information.”

“Every online retailer should have a clear Help section that’s easily accessible from their checkout pages, and explains exactly how 3-D Secure works and why it’s a good idea,” says Harvey. “A couple of lines of text explaining what will happen when your customer hits the Purchase button is also a good idea. If you provide a clear map that makes the process predictable, people are much less likely to lose trust.”

Harvey admits the task would be easier if the banks didn’t all implement 3-D slightly differently. “Some of your customers will be asked for a predefined password, others will be sent a one-time PIN. But so long as you acknowledge and explain what’s going on, you can help to overcome the hurdle.”

Merchants should take care to ensure their explanations are written in clear English that’s easy to understand, adds Harvey. “Avoid the technical jargon like ‘authentication’ and ‘issuing bank’ – an explanation that leaves people more confused just makes things worse,” he says.