3D Secure Payment Gateways: What Are They and How Do They Work?

E-commerce and online transactions have become all the rage. Studies show that online payment transactions rose to approximately 18,737 crore in India during FY 2023-24. 3D payment gateways go hand in hand with the rise in online transactions, and they have been widely discussed as being more beneficial for your online business.

Most merchants (and even shoppers) are familiar with 3D payment gateways. But what exactly are they, and how do they work? Let’s explore how they function and differ from other types, like 2D secure payment gateways.

What is a 3D Payment Gateway?

With the increase in online transactions also comes an increase in identity fraud and cyber security threats. Leading payment processors turned to preventative security measures known as 3D secure payment gateways to counter these issues. Its main function is to add a layer of security to any online payments and protect sensitive information. Some common examples include MasterCard’s SecureCode, Visa Secure, and the American Express SafeKey. 

What does the D in 3D secure stand for? 3DS payments utilise 3 Domain Servers to secure online transactions, hence earning its name. These three domains include: 

• Acquirer Domain: The merchant or seller getting paid. 

• Issuer Domain: The bank or organisation that issued the card being used. 

• Interoperability Domain: Payment systems that connect the first two domains, like Visa or MasterCard. 

Another term associated with 3DS is 2D payment gateways. These transactions are processed using safety measures like One-Time Passwords (or OTPs) and only ask for essential card details. However, they have fewer security features. 

The next-generation version of the 3D secure payment gateway is the 3D Secure 2.0. It aims to improve the quality of the previous model and enhance technology. The 2.0 version supports many more devices and channels, more convenient authentication methods, and more. 

How Does 3D Secure Work? 

It is important to understand how 3D Secure works to make informed choices for your business. The steps it follows are: 

1. Collecting data 

3D Secure acquires the cardholder’s data, such as the card number expiration date, name, and authentication codes (like the CVV). 

2. 3D Secure registration check

The payment gateway verifies if the card is registered for authorisation by 3D Secure. 

3. Redirecting to the 3D secure page

Once authorised, the buyer is redirected to their bank’s 3DS page. 

4. Additional security checks

Customers enter a unique one-time code they receive over text or email as an additional security measure. 

5. Redirecting back to the website

After authentication, the customer returns to the seller’s website and continues with the purchase. 

6. Confirmation of payment

After the buyer is redirected to the merchant’s website, they receive a payment confirmation. 

Why is 3D Secure Payment Gateway Important? 

3D secure payment gateways are essential when setting up online transactions for your business. Some benefits they bring include: 

• Better mobile-first user experience: They work on mobile devices and create a better user experience. 

• Reduced card abandonment rate: Studies show that 3D Secure 2.0 reduced card abandonment rates on websites by 75%. 

• Reduced time: They reduce the time needed to complete the checkout process. 

• Better security: Merchants are assured of better security, as 3DS provides additional protection for online transactions. 

• Better for international transactions: 3DS is supported by major international payment gateways. 

How Does a 3D Payment Gateway Differ from a 2D Payment Gateway?

How do 3D payment gateways and 2D payment gateways differ? Some major points include: 

Feature	3D Payment Gateway	2D Payment Gateway
Meaning	3D Secure uses 3 domains to provide its secure authentication: the Acquirer Domain, the Issuer Domain, and the Interoperability Domain.	2D Secure payment gateway stands for “2 Dimensional” payment gateways.
Card Payment Processing	Payment processing is completed using an additional security layer by requesting a one-time password.	Card payments can be completed using only the card number and CVV.
Security	3DS is more secure, requires additional safety steps, and prevents data breaches. Merchants are at a lower risk of fraud charges.	2DS is less secure, as payments don’t always require OTPs. Merchants are at a higher risk of fraud charges.
International Transactions	International payments can be made by default.	Additional paperwork is required by merchants for international customers.
Shopping Experience	Due to additional steps, it is less user-friendly.	The checkout process is faster, leading to a better user experience.

Read More: 2D vs 3D Payment Gateway: What Should You Choose?

In Conclusion 

2D and 3D Secure payment gateways are crucial for setting up your online business or processing transactions. Briefly summarise the article. 3D payment gateways add an additional layer of security and ensure your business is protected. It is also important to conduct thorough online research to find a payment gateway that best suits your needs, location, and business location.