What is a 3D Payment Gateway?

These days, payments for products and services purchased online can be issued in a number of ways. And while electronic payments with credit and debit cards prove to be the fastest and most convenient, fraud and information theft can be a major threat. Which is also one of the reasons why some shoppers will avoid using their card to perform a cashless transaction. So in order to make the transaction safer for everyone involved, payment processors have developed what’s called a 3D payment gateway. While it definitely sounds futuristic, these feature has been around for a while and help provide an added layer of payment protection.

About 3D Payment Gateways

One of the reasons why a buyer might dispute an electronic payment is because of fraud. Card-not-present transactions make it possible for unscrupulous users to take information from someone else’s card to make an electronic payment online. As long as you know the numbers on the card, you can pretty much use their money to pay for whatever you want, as long as there are enough funds in the account the card represents. Information theft is another reason why buyers might shy away from issuing an electronic payment online. Punching in such sensitive information as card details raises the possibility of having that important data stolen and used to pay for unauthorized transactions. And that’s precisely what a 3D payment gateway is supposed to protect buyers from. Here’s how it provides extra security for online payments:

• The buyer shops around for their desired products and services, fills up their cart and their shipping information, and then clicks ‘pay now.’
• They’re redirected to a payment page where they’ll fill out the digital form with all of their card information.
• Once they submit the form, the 3D payment gateway sends a one-time password or pin (OTP) to the mobile number registered under the card.
• To complete the transaction, the buyer must key in this OTP to guarantee that they authorize the transaction.
• If the OTP matches the one sent to the buyer’s phone, then the transaction is completed. If the code doesn’t match after three attempts, the transaction is canceled.

Facilities that use a 3D payment gateway significantly reduce the chances of fraud with this OTP feature. It effectively stops individuals hoping to steal card information to make transactions online unless they were also able to get a hold of the account owner’s mobile phone — which is especially unlikely.In some cases, buyers may have to register a unique password with the issuing bank in order to enjoy the benefits of a 3D payment gateway. This unique password or pin will be required to authenticate transactions in place of an OTP.

   

2D vs 3D Payment Gateway

The term 2D comes from the fact that the gateway protects two domains, namely the customer and the merchant. With a 3D or three domain secure payment gateway, the layer of protection is imposed on the merchant, the issuer, and the interoperability of the payment environment system. Unlike a 3D payment gateway, 2D payment gateways do not require a one-time password or a unique identification code. This means that customers can proceed with their payment with just card information only, increasing the risk of information misuse and identity theft. In essence, the 2D payment gateway is much less secure since it doesn’t use the strong authentication feature involving a unique OTP or code. So if their information is somehow acquired by someone else, the individual can pay for products and services online without having to key in the unique code. This leaves cardholders at risk of fraud, and banks and acquirers at risk of chargebacks.

Keep in mind though that there are scams that aim to override the 3D payment gateway by sending falsified messages or emails under the guise of the individual’s bank asking for their OTP. These phishing scams come from individuals hoping to complete transactions using the card information and the unique code sent to the buyer’s number. That’s why banks will often warn their clients against these scams. No bank or financial institution will ask for your one-time password or your unique code via email or text. In fact, banks will never ask for either of these codes in any situation since they have no purpose aside from authenticating online transactions.

Benefits of a 3D Payment Gateway

Although the 3D payment gateway provides serious advantages for the buyer, it also works to protect merchant acquiring banks and even the card issuer. Here are some of the most prominent benefits of leveraging a 3D payment gateway for online payments:

1. Fraud protection – For buyers, the ultimate benefit is of course, fraud protection. Even if someone were able to collect your card information, the 3D secure payment gateway prevents them from making a purchase with your card unless they’re able to provide the unique pin or password required to authenticate the transaction.
2. Liability shift – With 3D secure payment protection, the liability for any chargebacks that come as the result of fraud are shifted to the card issuer. This can be especially helpful for merchants who want to reduce their risk and relive the hassle of paying for penalties of qualified chargebacks.
3. Increased consumer confidence – Buyers who feel more secure that their information won’t be stolen or misused are more likely to make an electronic payment for products and services online. This directly increases sales by allowing consumers to confidently settle their payment using the options available.
4. International scope – There’s an increased risk when buyers come from out of the country. But with 3D payment gateways, you can minimize the associated risk even for buyers coming from around the globe. The 3D secure system therefore also increases virtual consumer activity on international soil.
5. No added cost – Although the benefits are overwhelming, there are no added fees associated with the use of a 3D payment gateway. So buyers and merchants won’t have to worry about paying extra fees to enjoy the benefits of increased security and protection.

The 3D payment gateway offers benefits for buyers, merchants, banks, and card issuers, paving the way for a healthy payment ecosystem where everyone can thrive with a reduced fear of fraud.

Are There Disadvantages to 3D Payment Gateways?

While the security it offers is definitely unprecedented, a 3D payment gateway does come with its fair share of downsides. For the most part, these have to do with the buyer’s convenience when executing an electronic payment online:

 

1. Tedious – Some buyers might actually find the extra step tedious, despite its obvious benefits to protect their information and their account. For some, those few added clicks and steps can water down the buyer’s drive and push them to abandon the transaction all together.
2. Lost codes – There are 3D secure payment gateways that require a password instead of a one-time code. Buyers who aren’t too keen on keeping track of all of their passwords can lose their unique code and thus fail to pass the authentication test themselves. Again, this is seen as a major inconvenience.
3. Internet subjectivity – The 3D secure payment gateway will force a pop-up to show up on the buyer’s screen where they can enter their unique code. In some cases, internet connectivity issues can stall the pop-up and even cause hitches in the payment process, leading buyers to abandon the purchase instead.
4. User settings – Some buyers will have robust settings against pop-ups on their browsers, so there may be roadblocks preventing the 3D payment gateway facilities from showing up on screen.
5. Technical – For buyers who might not be too well-versed with online and digital payment methods, the added security feature can be confusing and difficult to understand. Typically, those who fall within the older segment of the population may experience particular difficulty understanding how the process works.

What Cards are Protected?

Keep in mind that the 3D payment gateway is a service that’s exclusive to Visa and Mastercard. Any of the cards issued by these multinational financial corporations are automatically eligible for the 3D protection. However other cards from issuers such as American Express and Discover might not have the added layer of authentication.

A Safer Way to Pay and Accept Payments

No one wants to take on the risk of losing money to fraud and chargebacks during an electronic payment. But because most online businesses and buyers are becoming more open to the possibilities of credit and debit card payments issued online, it’s only fitting that you look into ways to strengthen and bolster the safety features of the process. A 3D payment gateway adds a layer of protection that benefits buyers, merchants, acquirers, and issuers with its advanced authentication process that prevents fraud. With this added feature, you can be sure to keep your funds and information protected if you’re a buyer. For merchants and acquirers, a 3D payment gateway reduces the risk of chargebacks and shift the liability to the issuer instead.

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