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The first version of 3DS was introduced more than 15 years ago. It was revolutionary at the time, but it certainly had its share of problems and as a result, the market adoption was slow.
EMV 3DS, better known as version 2, was released in 2016 and since then it has been improved to ensure a simple, secure, and seamless experience for merchants and consumers. As a merchant, there are a few key benefits to version 2 that you should be very excited about:
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It's proven that authorization rates are ~ 2% - 12% higher when there is a 3DS2 authentication (significantly reducing false declines)
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95% of transactions are authenticated without any lag or pop-up
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The credit card brands provide a chargeback liability shift on all authenticated transactions (eliminating chargebacks)
Unfortunately, the lingering bad experience of v1 has not been forgotten, and now that EMV 3DS is stable and mature, it is time for something to be done.
As with all things “software”, the publishers (in this case MasterCard and Visa) are deprecating the old version. Here’s how it plays out:
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On 1 October, 2021 The payment brands will cease providing stand-in processing for version 1. As we look at all of PAAY’s volume, just under 20% of all transactions use this stand-in service.
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Stand-in transactions are when the issuing bank has not built their own 3DS system and uses Visa or MasterCard to step in to authenticate the transaction for the issuer. Many US banks depend on this stand-in service as their only way to authenticate 3DS v1 transactions.
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What does that mean for you? 1.0 transactions that depend on stand-in processing will not receive a chargeback liability shift.
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On 31 March, 2022 MasterCard will no longer allow merchants to register with 3DS 1.0. For MasterCard, all new merchants will need to register with EMV 3DS.
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By October 2022 the payment brands will only offer a liability shift for EMV 3DS transactions and at that time there will be no liability shift for version 1 transactions.
PAAY is ready and waiting to help you with this migration. Upgrades are relatively easy and straightforward. Ideally, you should be ready before October 2021; but you really need to be ready before October 2022.
Give yourself enough time to make this transition, contact us and let us guide you through the process.
