3DS explained: A smarter layer of payment protection

Online payments are a core part of how modern consumers buy. Shoppers expect to complete purchases in a few quick clicks, whether they’re booking accommodation, paying school fees, or ordering something late at night. For merchants this ease and speed comes with a challenge: every year, global online fraud costs businesses around USD 48 billion, not to mention the thousands of disputes and chargebacks that eat into margins. 

That’s where 3D Secure (3DS) can help.

What is 3DS?

3DS put simply, is  an extra layer of security that helps confirm the person using a card online is the real cardholder. Think of it as the digital equivalent of a cardholder authenticating their card with a PIN in store.. 

When a customer enters their card details online, the bank may ask for a quick confirmation step. This could be a unique code sent by text, or a prompt in their banking app. Once confirmed, the payment continues as normal. For the customer, it’s only a few seconds of extra effort. For the merchant, it means far more certainty that the transaction is legitimate.

Why it matters for merchants

The main benefit of 3DS is protection from fraud, but the impact is more wide reaching than that.

Fewer chargebacks: Disputed transactions can be costly, both in terms of fees and time spent resolving them. When 3DS is used, liability often shifts to the issuing bank, meaning merchants face fewer disputes.

Lower fraud risk: Fraudulent payments are blocked before they settle, reducing revenue loss and reputational damage.

Customer confidence: Shoppers recognise the extra security step. Seeing it in action builds trust that your business takes their safety seriously.

Time and cost savings: Every avoided chargeback means fewer admin hours chasing paperwork, less back and forth hassle with banks, and more time focused on running your business.

Better payment approval rates: Some issuers are more likely to approve transactions that use 3DS. That means fewer abandoned baskets and stronger approval rates for payments made with stored cards or recurring payments, because the data has already been authenticated upfront and is trusted when used again.

How 3DS works in practice

3DS works by connecting three parties: the merchant, the cardholder’s bank, and the card scheme (like Visa or Mastercard). Together, they run a quick check to make sure the person using the card really is the cardholder. For merchants, the process is almost invisible.

For customers, the experience is simple and familiar. Most of the time, they’ll breeze through checkout without even noticing 3DS in action. But when the system flags a transaction as potentially higher risk, it adds a short verification step before the payment is completed.

Here’s what a typical 3DS payment looks like:

• A customer enters their card details at checkout.
• If the transaction is flagged as needing extra security, the customer is prompted to verify their identity.
• Once they confirm, the payment goes through as usual.

The key point is that it doesn’t necessarily happen on every transaction. Most purchases will still be as fast as customers expect. 3DS is designed to step in only when needed. This is usually for higher-value transactions, cross-border payments, or situations that carry greater risk.

The bigger picture

Online fraud may never disappear completely, but 3DS gives merchants a powerful defence. It reduces chargebacks, protects revenue, saves valuable time, and helps more payments get approved. Just as importantly, it reassures customers that their details are safe when they buy from you.

Ready to cut chargebacks and give your customers greater confidence at checkout? Ask us about adding 3DS to your payments.