Why do 3D Secure acceptance rates vary by country and how can you manage this?

Knowing how 3D Secure will affect your business is critical. More and more countries are due to start implementing strong customer authentication in the next year. The EBA just published the PSD2 deadline for 31 December 2020 and AusPayNet’s CNP Fraud Mitigation Framework came into effect 1st July 2019.

We recently released our 3D Secure and payment regulation interactive map, which uses data from millions of transactions collected in Q2 and Q3 2019. The map covers 3D Secure acceptance for issuers in each country.

In this map, 3D Secure success or acceptance means when a payment has been successfully authenticated. If a payment is lost through 3D Secure, this means 3D Secure was attempted but not successfully authenticated. This could be due to fraud, wrong password, abandoned checkout or it could be a technical issue with 3D Secure which causes a failure.

What’s interesting is that across the globe there are varying levels of 3D Secure success - in fact, in some countries, a payment sent to 3D Secure is more likely to fail. So what could be behind the difference in 3D Secure acceptance, and how can you manage the market environments when selling in multiple regions?

The size of the national ecommerce market could be a factor behind 3D Secure acceptance rates. Larger markets with many more payments could be a target for fraudsters. For example, Brits represent a disproportionate amount of cybercrime victims - despite making up just 1% of the global population, the UK accounts for 2% of the 978 million global victims of cybercrime and almost 4% of the global losses.

Below are the world’s biggest ecommerce markets with the acceptance rate of 3D Secure payments.

Most of these have an acceptance rate around the same as the global average of 77%. Although China has a much lower acceptance rate, it’s worth remembering that most payments in China are mobile, with only 14% made by card. Could the percentage of online payments made by card be a factor?

Countries where a lower percentage of the online payments are made by card often have lower rates of 3D Secure acceptance. Similarly to the Chinese market, Bulgaria’s card payments only account for 16% of all online payments, and the 3D Secure acceptance rate is below average at 67%.

In Greece, where over half of online orders are paid for by cash on arrival, 31% of card payments are lost through 3D Secure. This could signify that when card payments are less common, 3D Secure is less familiar and more likely to fail.

This is supported by the statistics for the Czech Republic, where 76% of online payments are made using card and 3D Secure acceptance is 81%.

Four more countries with particularly high acceptance rates for 3D Secure are Finland, Denmark, Sweden and Norway (between 83-86% acceptance). Percentage of online payments made by card vary between 37-53% for these countries, which is around the average, but not extremely high.

One reason behind why the acceptance rates are so high could be that these countries are on track to become ‘cashless societies’. They are characterised by the proliferation of non-cash payment methods, even for card-present transactions. Online, mobile apps such as Swish and MobilePay are also widely used. This means the card payments system is well developed and advanced, which could contribute to higher acceptance rates.

Some countries in the map already have mandates which require two-factor authentication on online payments.

Below are three countries with mandated authentication and the percentage of payments lost through 3D Secure.

This indicates that sending all payments to 3D Secure could result in lower acceptance rates. However, both India and Brazil have lower than average percentages of payments made by card, and so this could also be a factor.

There are other countries where a form of authentication is already widely used which don’t have as high rates of payments lost, such as Belgium (28%) and Sweden (14%).

As more and more countries adopt two-factor authentication, you need to adapt to ensure this doesn’t impact your conversion. Our advice for managing 3D Secure in different markets is:

Make it easy for customers to pay in different ways

Investigate the popular payment methods in your priority markets and make a plan to integrate them. You could also encourage the use of payment methods that already have an additional layer of security, such as e-wallets. Download our free report on global payment regulation to see the top payment methods and providers by country.

Keep fraud rates low

Use a fraud prevention solution to keep your fraud rates consistently low to avoid 3D Secure when you can. In Europe, this will enable you to request low-risk exemptions and you’ll avoid being forced to authenticate under the Australian mandate.

Communicate to customers about 3D Secure

Let your customers know if they will start to get authentication requests more often and give them insight into why this is happening to reduce confusion and checkout dropoff. Educate them about the process with FAQs, tips using 3D Secure and reminders at checkout.

Monitor issuer behavior around 3D Secure

In Europe, there is still a lot of uncertainty about how issuers will use 3D Secure. Keeping tabs on which payments get authorized and challenged will help you avoid using 3D Secure when you don’t need to. You can keep track of how issuers in Europe implement 3D Secure and handle exemption requests with our authentication solutions.

Use the best possible version of 3D Secure whenever you can

Work with your acquirer and plan to integrate 3D Secure 2 as soon as possible, in order to benefit from the reduced friction and ability to request exemptions to authentication.

To learn more about managing 3D Secure and payment regulations, check out our authentication solutions.