Successful Adoption of 3D Secure Authentication Continues to Grow Globally

The adoption of the latest version of 3D Secure authentication for online payments has significantly increased around the world, according to a new report by fraud prevention specialists Ravelin.

The global average for transactions passing through the latest version (3DS2.2)  has shot up to 17% from 1% in H2 2022. The frequency of version updates in 3DS2 is fast but so far the industry seems to be keeping pace. 2022 saw the final deprecation of the 3SD1 protocol.

Ravelin’s Global Payment Regulation Report highlights generally positive authentication success rates especially compared historically to 3.1. UK and Ireland merchants, for instance, saw 81% authentication success on 3DS 2.1 and 82% success on 3DS 2.2. Globally, authentication rates are similarly strong.

But significant numbers of merchants remain unconvinced by the promise of a new, more frictionless era of authentication with many saying they are ‘seriously concerned’ about the impact of Strong Customer Authentication (SCA) protocol on conversion rates, according to the Ravelin report.

In the UK and Australia 89% of those surveyed said they were concerned to some degree about the impact of 3DS. In Germany and Spain this jumps to 97%. In the US 93% are concerned (note - these figures combine slightly concerned, concerned, and very concerned figures). 

Despite these concerns, Ravelin finds that success rates for authenticating transactions via 3DS 2.1 and 2.2 are broadly comparable globally, while over half of transactions (rising to over 60% in Europe) are frictionless, i.e. authenticated without any direct involvement from the customer (see table below).   

Ravelin uses machine learning, expert rules and graph networks to help online businesses reduce losses to fraud, limit abuses of returns policies, and improve customer conversions. The company also offers a 3DS server, working with merchants to take full advantage of the advanced capabilities of the new protocols.

Ravelin CEO Martin Sweeney said: “These positive results should be very reassuring for merchants pursuing an authentication strategy in the fight against fraud. As a business we see 3D Secure as a vital cog alongside strong fraud detection, and judicious use of exemptions for friction-free ecommerce.  commerce professionals around the world are clearly concerned about the impact of 3DS on conversion rates no doubt based on the historically poor performance of 3DS1. We will continue to monitor any change in opinion with interest.

3DS2 is used to confirm digital identity during checkout and is performed by the issuing bank. In Europe, strong customer authentication (SCA) requires the use of 3D Secure 2 for card payments online.

Authentication is now ‘on by default’ for all European online transactions, which means European companies could lose business if the authentication experience provided by payment providers is poor.

Methodology & Data

The primary data source for the report comes from the transactions sent to Ravelin’s servers by their clients. Last year the company processed over 5 billion transactions across their global clientbase. The report focuses on 11 core countries.

In addition Ravelin have this year also sourced data from the newest versionof their Online Merchant Perspectives Survey. They asked some authentication-focused questions and have included a snapshot of those responses in this report.