Published: October 4, 2021
Reading time: 5 minute read
Written by: Forter Team

With a dramatic increase in eCommerce sales, businesses are more vulnerable to fraud than ever. Since 2019, eCommerce retail sales have jumped 7.9% and are expected to account for 22% of retail sales by 2023.

How can we protect eCommerce businesses from online fraud?

When it comes to credit card fraud, 3DS can help.

This article will highlight what 3D Secure (3DS) is, how it works, and some pros and cons of the platform.

What is 3DS?

3DS, also known as 3-domain structure, is a security protocol designed for credit and debit cards to protect online merchants from fraud. The protocol was initially developed by Arcot Systems, now known as CA Technologies.

First implemented by Visa to provide an additional layer of security for online payments, 3DS has several security protocols for different credit cards that are based on the platform, including:

  • Verified by Visa
  • MasterCard Secure Code
  • J/Secure
  • American Express SafeKey
  • ProtectBuy by Discover Global Network

These solutions are all distinguishable from the original 3DS solution, but they’re all derived from the same technology.

How Does 3DS Work?

As we mentioned, 3DS is also known as 3-domain structure. This name refers to the three-domain model the technology uses to provide additional security during the online checkout process. These three domains are:

  1. Acquirer Domain: The merchant’s bank acquiring the transaction
  2. Issuer Domain: The cardholder’s issuing bank used for the transaction
  3. Interoperability Domain: The infrastructure provided by whichever card company (MasterCard, Visa, American Express, etc.) supports 3DS

The consumer side of the transaction process with 3DS looks like this:

  1. The cardholder enters their card information into your payment form
  2. First, the system will check to make sure that the card details are correct before checking to see if the 3DS protocol is active
  3. The cardholder is then redirected to a new form where they will be required to verify their identity using a security question or some sort of 2-factor authentication
  4. The acquirer verifies the information and accepts payment if no errors are found
  5. The cardholder is directed to a confirmation page detailing whether or not the transaction has been accepted

Benefits of 3DS

3DS implementation comes with several benefits to both merchants and customers. Here are a few:

Chargeback liability shift

Normally, merchants are the ones liable for a transaction when a chargeback occurs. This makes chargeback fraud even more stressful for merchants.

With 3DS, the liability for chargebacks is on the issuing bank. Although merchants aren’t held accountable for these chargebacks, it is important for merchants to confirm the specific terms and conditions related to this shift in liability.

Reducing the risk of credit card fraud

3DS requires specific details from the cardholder, such as proof of identity, security question answers, or 2-factor authentication codes. This additional layer of security helps protect merchants from fraud.

It’s true that fewer transactions will be approved. However, in the end, it’s worth being able to protect yourself from fraud and increase the safety of your online payments.

Better customer experience and satisfaction

Although it may seem like providing additional authentication is a burden for customers, it’s often the opposite. Your loyal customers will appreciate you taking every precaution available to protect their sensitive data.

3DS Disadvantages

There aren’t many solutions out there that don’t come with a set of disadvantages. 3DS is no exception. The additional layer of security has a few limitations and things to watch out for.

Added friction between customer and merchant

Any time you add extra work for a customer to make a purchase, there’s bound to be some pushback. 3DS authentication puts a few additional steps in front of the customer before they’re able to complete the transaction. Unfortunately, this does have the potential to chase away some new customers, although it likely won’t end up being too many.

There’s also the fact that some customers may not remember answers to security questions, or they might have issues with their 2-factor authentication codes. If either of these scenarios occurs, the transaction can be difficult, if not impossible.

False declines

Adding additional authentication to transactions has the potential to lead to more false declines. However, 3DS 2.0 has addressed this and reduces false declines by enabling issuers to access far more data than before and perform a better risk analysis.

Additional costs

Depending on how you implement 3DS and which payment processor you have, there can be some additional costs to consider. However, it’s also worth noting that you could be saving money in the long run with 3DS’s protection from chargeback liability.

3DS Helps Protect Your Online Payment Process

Although it isn’t a requirement, 3DS can protect your online payment process from fraud and chargeback liability while providing other benefits as well.

It’s true that 3DS has a few disadvantages. However, a closer look will tell you that the pros outweigh the cons. With 3DS enabled, you can rest a little easier with additional security protecting you from fraudsters.

How Forter Can Help with 3DS: A Smart Approach to PSD2

Forter offers businesses a more intelligent approach to PSD2, enabling them to maximize their SCA exemptions to reduce friction and drive more successful transactions while maintaining PSD2 compliance. Our PSD2 Solution feature makes real-time payment decisions and routes transactions through 3DS only when necessary to ensure the transaction is successful. In addition to this intelligent recommendation functionality, we also provide 3DS execution for businesses that need it.

While it’s no secret that SCA can introduce complexity and friction into the buyer journey when you optimize the process with a solution like Forter, you can improve the customer experience and increase revenue while staying compliant.

For a more comprehensive approach to your payment optimization, click here.


About Forter

Forter is the Trust Platform for digital commerce. We make accurate, instant assessments of trustworthiness across every step of the buying journey. Our ability to isolate fraud and protect consumers is why Nordstrom, Sephora, Instacart, Adobe, Priceline, and other leaders across industries have trusted us to process more than $500 billion in transactions. Click here to learn more.


5 minute read