The right way to implement 3DS2.2

Transitioning to 3DS2 entails many benefits when compared to 3DS1, such as frictionless flow, enhanced security, and improved mobile device compatibility. However, its implementation can be a cumbersome task, presenting numerous challenges. Therefore, it is important to be aware of such impediments and the solutions that can be adopted to address these. 

The main issue associated with the 3DS2 implementation is the lack of awareness among customers, merchants and banks. Namely, customers had little idea about the regulatory changes and the new 3DS2 authentication, which is why many shoppers drop-out when they first encounter 3DS2 authentication. Besides, merchants and banks were also unprepared for the new authentication protocol, mostly due to the lack of technical know-how and the knowledge gap pertinent to 3DS2 implementation. This led to bugs and technical errors which caused challenges to 3DS2 adoption. Additionally, the rollout of 3DS2 has not been smooth either, due to the phased rollout strategy. Many countries implemented and started enforcing 3DS2 at different points in time, or not even yet, which constitutes fragmented requirements for cross-border merchants. Finally, the implementation of frictionless flow has also been rather lagging; at our company we observe that issuing banks are being conservative and requesting customer authentication more often, causing unnecessary frictions. 

To address all of these issues, there are numerous solutions one can adopt. At its core, the whole 3DS2 checkout experience should be smooth – the customer should not feel like they are leaving the merchant website or that their payment is not secure. This can be achieved by designing the checkout pages in the same look and feel as the merchant’s page, promoting shoppers’ trust. Moreover, one can also use the checkout page to educate the shoppers on the new protocol changes by providing a general description of why certain authentication information is required. This could help ease the customers and make the implementation of 3DS2 considerably easier.

Payment companies should also take on a larger role in ensuring a frictionless adoption of 3DS2. It is not the main focus of the merchant’s business and evidently, most merchants do not possess the technical knowledge, hence good 3DS2 implementation should support merchants, requiring little to no effort from their side. For example, at WLPayments our merchants are only required to add an easy-to-implement injector file developed by our team. Lastly, payment gateways should also share as much data as possible with the issuers, so that they can increase frictionless flow. At the same time, if the issuers are not ready for 3DS2, gateways should closely analyze the transactions and adopt 3DS1 for subsequent transactions, reducing the number of errors and declines.

As a last note, the aforementioned solutions only address existing 3DS2 implementation issues. Nonetheless, it is imperative to look beyond compliance and implement functionalities that overall optimize the 3DS authentication process. At WLPayments, we have developed 3DS routing, which routes transactions to the most efficient authentication protocol, taking into account exemptions and other valuable information. This feature allows merchants to decide and implement their own 3DS2 strategy. Specifically, merchants can choose which transactions they want to pass on to 3DS2, 3DS1, or no 3DS. For regular customers with a small likelihood of chargebacks, merchants can route the transactions with exemptions, ultimately decreasing checkout frictions and potentially preserving loyal customers. Aside from this, if a merchant is entering a new market, 3DS routing enables them to conduct A/B testing for 3DS authentication. Thus, the merchant can choose to route part of the transactions with 3DS2, some with 3DS1 or no 3DS, in order to make informed decisions and find the most optimal approach that suits their business model and customer segment.

In conclusion, 3DS2 can prove to be very beneficial, but it is important to keep in mind that this is contingent on correct implementation. Indeed, there are many challenges associated with the adoption of the new protocol, the process is far from effortless. Moreover, as discussed, the challenges are encountered at all levels; at the customer, merchant, as well as bank layers. Therefore, one must consider various solutions that could solve implementation problems and take away the frictions. In my view, payment gateways are in the best position to achieve this as they can bridge this gap and solve implementation issues at all levels.