Deliver more good orders this holiday season (and ditch the fraud) with EMV® 3-D Secure

By Jaime Howard, VP, Global Product, CardinalCommerce

It’s almost holiday shopping season. For some merchants -- and shoppers -- holiday shopping started weeks ago. With ecommerce accelerating and expected to continue growing due to COVID, do you have the right tools in place to fight fraud and authorize more orders?

Let’s take a look back. 

Consumers spent over $791 billion online with U.S. merchants in 2020. That’s a 32.4% year-over-year increase, which, is the largest YOY jump for U.S. retail sales ever recorded.

Now let’s talk holiday. 

We know the holiday season can make or break annual sales numbers for our merchants, and it’s probably the same for you. During holiday 2020, ecommerce jumped 32.5% to $185.88 billion and Cyber Monday was the heaviest online spending day in U.S. retail history. 

That’s in history. And it’s only going to get bigger. That’s a lot of opportunity, and a lot of potential risk. That’s why it’s important that you have the best payment decisioning tools and solution partners in place.

We know our merchants are always juggling competing priorities and goals -- during the holidays, multiply it by a hundred. You want a better consumer experience, less fraud, fewer false declines, and higher sales. 

Contrary to popular opinion, you can have it all. EMV 3-D Secure can help you reach your goals and see improvements to the bottom line.

October is National Cybersecurity Awareness Month, and time to get ready for holiday shopping season. Merchants should make sure their online stores are ready for the increase in interest from customers… and fraudsters. 3DS can help.

To understand EMV 3DS, and see if it’s right for your business, here are a few questions to ask yourself to see if it can help your online store for holiday and beyond.

Do you have the right data to give your consumers a great checkout experience?

We’ve all heard data is king, and with EMV 3DS, it really is. 

You’re sharing more than 130 data points on every transaction with issuers so they can make more confident risk decisions, for a better shopper experience. Plus, it helps reduce false declines and fraud, increase authorizations, and creates a better consumer experience. 

The networks are launching new programs built around compliance and KPIs. And this latest version of 3DS was built to support the ever-changing ecommerce ecosystem.

Are false declines hurting your bottom line?

Fraud can be a big problem for ecommerce merchants, but false declines deserve attention, too – orders that look like fraud but are actually legitimate consumers. In 2021, false declines are estimated at $443 billion in the U.S., vs an estimated $6.4 billion in fraud^, according to Aite Group’s 2019 report The Ecommerce Conundrum. That’s 69 times more revenue lost due to false declines than fraud for U.S. ecommerce.

The big challenge is balancing between managing risk and killing good orders. 

If a fraud tool or risk engine flags ten orders out of 100 as potentially risky, do you think all ten are fraud? If one or two are actually fraud, you don’t want to insult all the legitimate consumers, already stressed with their holiday shopping. This may drive the frustrated shoppers to another payment method or merchant for that transaction and more.

How much friction is too much?

Everyone’s worried about friction when it comes to 3DS. The truth is, a challenge during authentication isn’t a bad thing. It’s commonplace around the world, and online shoppers in the U.S. are getting used to it, too. 

If a consumer is challenged today, the challenge method can be a biometric through their banking app or a one-time passcode by text. They probably use these authentication methods already, and don’t view them as a big deal. With EMV 3DS, friction (a challenge for more information) is introduced only when our data indicates the transaction looks especially risky.

If a fraudster gets challenged, though, they probably won’t have the consumer’s device to receive the text and certainly can’t provide a matching biometric to authenticate, so fraud is stopped. It’s doing what it is supposed to do.

If you can deploy authentication without forcing a challenge or additional step, you’re bringing the overall friction down significantly, because with the rich data getting to the issuers, it helps authorize more good transactions.

Ecommerce is expected to dominate this holiday season again due to COVID-19. Our merchants have success using EMV 3DS as part of a layered approach to fighting fraud and false declines. It’s one of many tools in your arsenal to not only kill the bad orders but help increase good ones.

CardinalCommerce has seen authentication programs deliver results worth getting excited about. In some industry verticals, we’ve seen authorization increases of up to 7% on authenticated transactions.¹ What could that mean to your bottom line?

EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.

¹ Cardinal and Visa data. Statistics are drawn from the latest available data covering the period Nov 2017 to Nov 2018