When you go out to buy anything, chances are you don’t carry your wallet anymore, and why bother when your phone can get it done in a few seconds, and that too without the hassle of change? Digital payments are at a constant rise; in fact, India has more digital transactions than most developed nations today. In such a scenario, the need for secure payments is vital, as any hacker would then steal your money during the transfer. This is where 3DS 2.0 comes in.
3DS 2.0 or 3D Secure 2.0 is a way to verify transactions when the card is not present. The goal of the technology is to make sure that the person using the card is the real cardholder and not a criminal or someone else who shouldn’t be using it.
But how does it enhance online payment security? In this article, we’ll dive into just that.
What Is 3D Secure and Why Does It Matter?
3D Secure is a set of processes, tools, and frameworks that make online credit and debit card transactions safer and more secure. 3D stands for the three areas that work together when using the protocol:
- the merchant or acquirer
- the buyer or issuer
- the interoperability domains
These areas work together to make sure the cardholder is who they say they are and that the transaction is real.
The original version of the protocol, 3D Secure 1.0, was widely adopted to prevent online payment fraud. However, it had several user experience challenges. Some users couldn’t see the 3DS authentication page on their devices. It was a pain to type in OTPs, PINs, and passwords by hand. Also, remembering multiple credentials became an additional burden.
To address these issues, 3D Secure 2.0 was introduced. Developed by EMVCo, a global body that facilitates secure and interoperable payment transactions, the updated protocol is more user-friendly, mobile-optimized, and designed to reduce checkout friction while maintaining high security.
What’s New in 3DS 2.0? Key Enhancements?
There are many changes the 3DS 2.0 has made from the first one. The way 3ds 2.0 has been enhanced is:
Improved risk assessment
3DS 2.0 has made it much easier for issuers to get more data. This gives the system a lot more information about the customer and the transaction, which helps make better risk assessments, better outcomes for both the shopper and the merchant, and higher acceptance rates.
Improved user experience
Because of better risk assessments, customers that 3DS 2.0 thinks are low risk can keep buying without any problems (frictionless flow), and the whole thing happens “behind the scenes.” Customers who are more likely to be victims of fraud can now use a simple authentication method like biometrics or a one-time password (OTP) that can happen entirely on the merchant’s website or app. Customers trust and believe in your business more because of the better user experience.
Reduces fraud and chargebacks
More accuracy means that real transactions are more likely to be accepted and fraud is less likely to happen. 3DS 2.0 also protects merchants by putting the responsibility for chargebacks related to fraud on the card issuer.
Reduces cart abandonment
Adding the 3DS experience to the user’s shopping journey makes it less disruptive and less likely that they will give up on their purchase out of frustration.
Difference between 3DS 1.0 vs. 3DS 2.0
The table below will help you understand the difference between 3DS 1.0 and 3DS 2.0:
| Feature | 3DS 1.0 | 3DS 2.0 |
| Designed For | Browser-based desktop transactions | Cross-platform: mobile, app, desktop, IoT |
| User Experience | Often clunky; redirects to a separate authentication page | Smooth, in-app authentication; minimal redirects |
| Authentication Method | Static password or OTP | Dynamic, risk-based authentication with biometrics, tokens, OTPs, etc. |
| Device Support | Limited mobile support | Native support for mobile, apps, and wearables |
| Friction Level | High authentication is required for most transactions | Low–risk–based authentication allows many low-risk transactions to pass without OTP |
| Data Sharing | Minimal contextual data shared | Rich data sharing (e.g., device info, location, transaction value) for better decision-making |
| Fraud Liability | Merchants often bear the liability | Liability shifts to the issuer post a successful 3DS 2.0 flow |
| Compliance with PSD2 | Not fully compliant | Built to meet PSD2 Strong Customer Authentication (SCA) standards |
| Cart Abandonment | High due to poor UX | Lower due to seamless experience |
| Approval Rates | Lower due to false declines and friction | Higher approval rates due to intelligent risk analysis |
| Integration Complexity | Basic implementation | SDK integration for mobile apps; more data fields required, but offers flexibility |
| Support for Modern Payment Use-Cases | Limited | Fully supports one-click payments, subscriptions, and recurring billing models. |
How 3DS 2.0 Benefits Stakeholders?
Now, it’s clear that 3DS 2.0 has a lot of advantages over its predecessor; after all, it’s a massive improvement. But how does it benefit all the stakeholders?
For Customers
Since customers face less friction during checkout, they feel a far more convenient experience. Also, this increases their trust in the platform as the payment is far more secure. There are fewer false declines as well, so no interruptions.
For Merchants
Giving a seamless experience to customers directly benefits the merchant. There is less cart abandonment, so they can actually increase their transactions. Also, this increases the merchant’s approval ratings and creates a brand perception that it provides a seamless experience, which it does.
For Banks & Issuers
Thanks to the smarter risk analysis, there are significantly fewer frauds, which means that the bank’s reputation improves drastically. Now, since they have lower fraud rates, they can share data better with merchants. This also aligns with their compliance goals, so all in all, it’s a win for all.
Conclusion
With digital payments being at the helm of all payments, India is leading the charge with having one of the highest digital payment rates in the world. Having a secure transactional gateway is quite important with 3DS 2.0, which has become possible with enhanced security and by providing users with a smooth transaction.