American Express on How 3D Secure 2.0 Threads the Needle Between Fraud Protection and Customer Convenience

Credit card fraud is endemic in the United States and abroad, and banks and providers have worked tirelessly for decades to minimize its impacts. The rise of eCommerce has only made this task trickier, as bad actors can now spoof thousands of credit cards at once and use them almost instantaneously.

The credit card industry thought it had a good handle on the problem with the introduction of 3D Secure in 1999. The protocol was leveraged by many card providers under various names: Visa Secure, Mastercard SecureCode and American Express SafeKey, among others. This system was effective at preventing fraud, but it inadvertently created issues with customer seamlessness, according to JJ Kieley , vice president of payment products at American Express .

“The key thing that they were focusing on was an interoperable system, so that merchants and card issuers could use a standard protocol of sorts,” Kieley said in a recent interview with PYMNTS. “What it focused on was authenticating a customer at checkout. Merchants would send information to the issuer through 3D Secure, and through that authentication, they can see whether or not there is a fraudster trying to use a compromised card or if it’s actually the card member.”

This authentication process was extremely time-consuming, leading to the development of 3D Secure 2.0 in 2016. Kieley offered PYMNTS an inside look into the drawbacks of the first iteration, what led issuers to reconsider their approaches and how 3D Secure 2.0 improves on the original version.

The Drawbacks of 3D Secure

The original 3D Secure had a number of deficiencies, especially when it came to customer and merchant satisfaction. The authentication system was obtrusive and slow to process, and it also required additional active input from the customer to make transactions go through.

“You click a button saying ‘checkout,’ and then […]

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