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US leads UK in 3DS2 use for payment authentication

The US is beating the UK in the rollout of the 3D Secure 2 (3DS2) multi-factor authentication protocol, new data from Ravelin shows.

Percentage of 3DS 2 transactions regionally68% of transactions in the US now use 3DS2, with a significant 99% authentication success rate. By comparison, just 7% of UK transactions use 3DS2 with a 55% authentication success rate — despite the arrival of PSD2 mandating the use of strong customer authentication.

The UK, however, is outperforming the US on frictionless payments whereby authentication and payment go through without any challenges. 40% of UK payments were frictionless, compared to just 25% in the US.

3DS2 is used to confirm digital identity during checkout and is usually 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.

Ravelin’s research is part of its Global Payment Regulation and Authentication report, which draws on data collected from millions of 3D Secure transactions between February and April 2021.

Globally, an average of 16% of payments use 3D Secure 2, with an average authentication rate of 55%. Payments using 3DS2 in Europe, however, lag behind at 13%, although have a higher authentication rate of 99%.

Ravelin’s data also shows discrepancies around how Danish issuers are managing 3D secure, potentially due to the SCA enforcement date being brought forward. With 98% of payments using 3DS2, Denmark has largely made the switch. But worryingly, only 20% of payments are being authenticated successfully.

“3DS2 is a vast improvement over 3DS1 in terms of smoothing out the payment experience, but our data shows that merchants in many different countries still have a long way to go to adopt 3DS2 — especially merchants in the UK,” says Martin Sweeney, CEO, Ravelin.

“Once they do, however, it’s important to stress that 3DS2 isn’t a silver bullet when it comes to cutting online payment fraud. Merchants should also be considering using sophisticated machine learning-based tools that can quickly spot and flag anomalies in real time.”

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