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Should you use 3DS authentication or not?

3DS authentication costs merchants 2-3.5% in conversion rates in Europe and upwards of 15% in the Americas. Here's why you should use 3DS authentication.

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Merchants are investing millions in improving conversion rates. Just to be sure that the customer will not drop off the cart. 3D Secure is often perceived as a conversion killer since it complicates the payment process. At Nethone we have found that 3DS authentication typically costs merchants anywhere between 2% and 3.5% in conversion rates in Europe and upwards of 15% in the Americas. A smart approach to 3DS will not only reduce your risk of fraud but will boost your conversions.

The cost of 3DS authentication

Let’s face it, your company spends a lot of money to acquire its customers. It can be through eye-catching ads, a beautifully addictive product or viral design but it costs your company mountains of energy and money to acquire every customer which lands on your site.

Once you have acquired that customer, you will make sure to push her through the smoothest, fastest-loading purchase funnel known to man. Your marketing department will optimize the size of the “buy button” down to the pixel and make sure that the colours you use have been A/B tested to perfection.

Your customer will take one look at the work of art you and your entire company have built and not be able to resist the urge to use your product and fork over the money necessary to do it. She will provide her payment details and click on your “check-out” button. It’s at this point that your painstakingly acquired customer is redirected to a page served by her bank which is not even optimized for mobile. After zooming in on this tiny little box, she reads that she received an SMS with a code that she now has to enter into this box. She then changes apps to her SMS app, reads “487293”, goes back to your site types out the first 3 numbers, forgets the rest, changes back to the SMS app, reads the number again, and then switches back to your site and finishes typing the code. She clicks on proceed and gets shown a page saying that she must have made an error when entering her code.

This is the current state of payments online - sites are investing millions on improving conversion rates throughout the customer flows just to throw all of that money out at the last step. At Nethone we have found that 3DS authentication typically costs merchants anywhere between 2% and 3.5% in conversion rates in Europe and upwards of 15% in the Americas. This is why we never recommend our merchants push 3DS for all transactions. It’s essential to apply dynamic 3DS and only push 3DS to the riskiest transactions - this will allow your safer customers to finish their checkout process uninterrupted.

Typically we have seen that it’s only necessary to push 3DS authentication to less than 8% of your traffic which will lower the impact on your conversion rates by more than 90%!


How to effectively manage 3DS authentication

So what do you need to get started? Only two things:

  • Integration with a highly precise fraud prevention platform, you need to make sure that the company choosing who is risky and who is safe is the best out there. Anything else can cost you a lot of money and headaches in the form of fraud and chargebacks.
  • Integration with a versatile 3DS provider capable of working with all the issuing banks used by your customers.

At Nethone we provide both of these services bundled in one to make it as easy as possible for merchants to implement the most efficient 3DS authentication strategy. We have also built the tools necessary to comply with the regulations of each issuing bank that you are using - so for those banks which make 3DS authentication obligatory, we make sure to comply.



If you are interested to learn more about the benefits of an integrated 3DS authentication process, let's schedule a call