With digital payments doing the rounds, and India leading the charge as one of the most digitally payment-savvy nations, the need for secure payment options rises more than ever. Since frauds have been on the rise, people are demanding a seamless user experience.
This is where 3DS 2.0 comes into play. It has emerged as a key player in ensuring a smooth user experience while simultaneously ensuring security features that ensure your details are safe. In this article, we will dive deep into 3DS 2.0 and how it helps in e-commerce compliance.
Understanding 3DS 2.0: A Quick Overview
To put it simply, when you don’t have a card, 3D Secure 2.0 is a way to prove who you are. The goal of the technology is to make sure that the person using the card is the real cardholder and not a criminal or someone else who shouldn’t be using it. 3D Secure 2.0 is an improved version of the original 3D Secure technology.
Since it first came out, the platform’s features have changed a lot. The 3DS process had a lot of problems, and 3DS 2.0 was made to fix them. Now, the technology gives merchants a lot of advantages, such as better fraud decision-making with less hassle and better chargeback protection.
3D Secure was first released in 2001 to add extra layers of fraud protection for transactions where the card is not present. The idea was to ask for information that only the cardholder would know, which would lower the chance of unauthorised transactions. The goal was good, but the way the original technology tried to reach it wasn’t.
After giving their payment information for an online purchase, the shopper was sent to a different authentication page made by the card issuer (issuing bank). The page asked for a static password that the cardholder was supposed to remember and use for any transactions that 3DS 1.0 covered.
Core Features That Make 3DS 2.0 Better
So, how is 3DS 2.0 different from its predecessor? If we had to put it shortly, it is different by leaps and bounds. The table below explains it better.
| Feature | 3DS 1.0 | 3DS 2.0 |
| Authentication Method | Static password | Dynamic passwords, OTPs, and biometrics |
| Friction | All transactions require authentication (100% friction) | Only high-risk transactions are challenged (~5%); most go through frictionless flow |
| User Experience | Poor – mismatched interfaces caused user distrust and cart abandonment | Seamless – integrated into merchant flow, better visual consistency |
| Device Support | Browser-only | Browser, in-app, and mobile supported |
| Data Used | ~15 data points (limited context) | 150+ data points (including device ID, location, transaction history, etc.) |
| Risk Assessment | One-size-fits-all authentication | Real-time risk-based decision-making using machine learning |
| Password Issues | Easy to forget static passwords due to infrequent use | Uses device-based or OTP authentication; no static passwords |
| International Use | Limited primarily to domestic transactions | Supports both domestic and international transactions |
| Compliance | Not aligned with newer regulations like PSD2, SCA | Built for modern compliance standards (e.g., RBI, PSD2, GDPR) |
| Impact on Conversion | High cart abandonment due to poor UX and loading issues | Reduced cart abandonment due to smoother and faster checkout |
| Fallback Rate | No fallback – either it works or it fails | Designed to reduce fallback scenarios and optimise success rates |
3DS 2.0 and E-Commerce Compliance
But the question remains, how does 3DS 2.0 help with e-commerce compliance? Well, there are many ways it does, including:
Reduces the risk of fraud
Scammers find it harder to commit fraud online when there are more layers of security. It gives customers peace of mind that they are buying from a real business and protects your business from fake purchases.
Shifts liability to card-issuing banks
3D Secure protects your business from chargeback liability because the bank that issued the card is responsible for transactions that have been verified.
Enhances protection for customers and merchants
Customers get extra layers of security that make it harder for thieves to steal and use their credit or debit card information. Businesses benefit from fewer fake transactions and more trust from customers.
Ensures secure data transmission
SSL encryption protects all transactions, keeping sensitive information safe as it moves between banks. It makes sure that everyone involved has a safe experience.
Improves the customer experience
Customers are happier when transactions are safer and the checkout process is easier. This makes them more likely to buy again and stay loyal to your brand.
Facilitates international growth
The extra security makes international transactions safer, which will help your business reach new and international markets and grow around the world with confidence.
Supports regulatory compliance
3D Secure helps businesses follow payment rules like PSD2 in Europe by providing Strong Customer Authentication (SCA), which lowers the risk of getting fined for not following the rules.
Conclusion
Digital payments aren’t the future; they’re the present, and the need for secure payments is the need of the hour, with 3DS 2.0. You get a balance between security and a smooth user experience. Not just that, it’s a necessary step to follow the rules of compliance and gain the trust of customers.
FAQs
What is 3DS 2.0 and why is it important for e-commerce?
A1. 3DS 2.0 is an authentication protocol that adds a security layer to online payments, reducing fraud and ensuring PSD2 SCA compliance.
How does 3DS 2.0 differ from 3DS 1.0?
A2. 3DS 2.0 offers improved user experience with mobile support, less friction during checkout, and enhanced security through real-time risk analysis.
Is 3DS 2.0 mandatory for EU-based e-commerce businesses?
A3. Yes, under the PSD2 regulation, it is required for online stores to implement 3DS 2.0 for strong customer authentication.
How can I integrate 3DS 2.0 into my store?
A4. Choose a 3DS-supported payment gateway, follow the setup guide provided, and perform thorough testing to ensure compliance.
Does 3DS 2.0 work with mobile apps?
A5. Absolutely. 3DS 2.0 is optimized for mobile commerce and supports biometric authentication, making it ideal for app-based transactions.
Fakhar Nazir 
Allen