3d Secure Payment Gateway: How It Has Turned Out To Be A Boon For The E-commerce Industry In India?

By Author: Sahil Verma
Total Articles: 160
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Because of constant concerns about the security of such transactions, online transactions were not very popular among cardholders in India. Payments through online payment gateway were mostly made with credit cards because banks were hesitant to issue debit cards for obvious security reasons as well as a lack of awareness about chargeback procedures and efficiencies.

The situation changed after the Reserve Bank of India mandated two-factor authentication in India, and the card industry adopted the 3-D Secure methodology to ensure compliance. Credit and debit card transactions now have an extra layer of security thanks to 3-D secure. It is an XML-based protocol that includes an additional validation step for online payments in which the cardholder's identity is authenticated by the bank that issued the card. The technology was first adopted by Visa as Verified by Visa, and then by MasterCard as SecureCode.

The 3-D Secure authentication model is based on the 3-Domain model, hence the name.

During the payment process, three parties are involved:

i. The bank that issued ...
... the card being used is known as the issuer domain.

ii. The domain of the acquirer, or the merchant/acquirer to whom money is paid

iii. Interoperability domain, which is the network used, such as Visa and MasterCard

When using 3-D Secure technology, the payment process is redirected to the website of the bank that issued the card in order to authenticate the transaction. 3-D Secure requires shoppers to enter either a static or dynamic password to help confirm the cardholder's identity at the time of purchase. For first-time buyers, a registration process may be available during the transaction. 3-D Secure is a well-known method of reducing all types of online fraud. It also assists merchants in lowering the online costs associated with managing a payment service.

Major benefits of 3D Secure

1. Opening up of debit cards for online payments

Previously, debit cards were not permitted for online financial transactions because banks were concerned about the security of such transactions. Banks' confidence has grown significantly since the implementation of 3-D Secure, and they have opened up debit cards for online payments as well.

2. Increased confidence in online shoppers

Once cardholders realize how simple and secure it is to pay online, the convenience of doing so ensures that they continue to pay online.

3. Proven technology to reduce fraud

3-D Secure has been shown to significantly reduce online fraud, particularly when combined with other fraud prevention tools such as Cardholder Verification Value, Address Verification Services, and so on.

4. Liability Shift

The main advantage for merchants who use 3-D Secure technology is the availability of a liability shift for a transaction that has been completed and verified successfully. As the liability is assumed by the card issuers, this provides merchants with a shield against all types of chargebacks. This is a significant advantage that can result in fewer chargebacks and disagreements for certain types of fraud. Even if the issuer or cardholder is not present, merchants can benefit from this type of protection.

With all of these advantages, 3-D Secure has fueled a meteoric rise in online card transactions in India. However, all good things have a cost, and 3-D Secure is no exception.

While it has greatly expanded the market, there are some issues that must be addressed:

1. Routine customers have a poor payment experience. If the same user visits the same website from his or her personal device and pays with the same card, he or she is still subjected to the 3-D Secure process. While this ensures complete transaction security, the payment experience can be greatly improved through the best online payment gateway.

2. Browser redirection to the Issuer domain causes many transactions to fail due to India's slow Internet speeds. This has an impact on success rates and is one of the reasons for a drop in business for eCommerce companies.

3. When using the card on an Interactive Voice Response (IVR) payment system, the cardholder must punch in the OTP, which must either be pre-generated or read in the SMS, which is inconvenient for the cardholders.

4. Finally, the transaction time increases significantly as a result of this, as do the chances of failure if the OTP SMS is not delivered or the cardholder forgets the static password.

To summarise, 2-factor authentication, also known as 3-D Secure, is one of the primary reasons for the growth of eCommerce and online payments in India. Certain challenges must be addressed in order to improve the customer experience while also ensuring low failure rates.