Major Changes to SA’s Online Payments – Welcome 3DS 2.0

Over the next few months, most card schemes will require payment platforms and retailers to migrate to the new standard, 3DS 2.0. The shift to 3DS 2.0 is connected to the increased growth in ecommerce, the need for additional security parameters, and the demand for seamless user experiences. All these factors are essential to the continued growth of ecommerce and the retention of a growing online customer base while ensuring that customer security concerns, and risks, are addressed as intelligently and carefully as possible.

3D Secure was originally developed more than 10 years ago. The protocol was designed to be an additional security layer for online credit and debit card transactions. The name refers to the “three domains” which interact using the protocol –  the acquirer domain, the issuer domain, and the interoperability domain. 3D Secure 1 was widely adopted and recognised , but not exactly user-friendly, with a pop-up window which appeared saying ‘Verified by Visa’ (later rebranded as Visa Secure), ‘SecureCode’ from Mastercard, and ‘Safekey’ from Amex. The system was somewhat convoluted, complex and was often plagued by compatibility issues. Over time, many etailers have come to see 3DS as a security benefit that gave them peace of mind when shopping online.

The arrival of 3DS 2.0 is a welcome upgrade, one that introduces some significant improvements to online payment processing and security. The new solution uses more data to assess the risk associated with a transaction. Transactions that are considered low risk by the cardholder’s bank can potentially be authenticated without the need for an OTP (One Time Password) or other forms of authentication that banks use. This reduces the friction currently experienced by customers in the checkout process without compromising on security and therefore potentially reducing abandonment.

In another potentially major change, the Reserve Bank (SARB) has proposed a new inclusive ‘Payment Industry Body’ (PIB) which will replace the present representation of the payments sector. The Payments Association of SA (PASA) has been asked to set this new body up within 9 months. EFSA expects to be involved representing e-payments interests for online selling.