What is a 3-D Secure Transaction?
3-D Secure is an XML-based protocol; a digital system for online credit or debit card transactions, designed as anti-fraud protection. It’s got somewhat of a mixed reputation in the game development community, because it can block user payments and decrease conversion. However, it’s not as huge of an impact as developers might think, and Xsolla would like to describe why that is the case.
The Upsides of 3-D Secure Transactions
One big reason to use 3-D Secure Transactions is that when you implement receipt of these payments, there is more user authentication and thus more protection against fraud. This discourages the type of fraud which is most prevalent: online purchases where confirming the identity of a customer is hard to do. 3-D Secure Transactions also give the seller a more defined idea of their liability in regards to refund or payment cancellation.
Additional user authentication is carried out by a selected, secure password – a PIN – and certain devices can remotely confirm the identity of the buyer, as well. When a player makes a purchase on-line, he is asked to enter an appropriate password, which has been set up already. Sometimes, further security measures can be taken in the form of additional elements, such as authentication via a mobile phone (a code can be sent through SMS).
The Downsides of 3-D Secure Transactions
“There are three factors to authentication of credit card purchases. A user must be logged into the game, the user must have the card number and its security code, and the user must know where they can get the password for 3-D Secure (i.e. a phone number which they already have associated with the bank account at their institution). With 3-D Secure, this is a common implementation of safety requirements. Unfortunately, not everyone likes the extra trouble and effort when making an purchase.” – says Vladimir Karnishin.
Some problems tend to arise around the stage of authentication when a user is asked to enter a verification code before they receive confirmation of their purchase. On various platforms, additional authentication can be implemented in different ways. For example, the most common is a pop-up window in which you must enter a correct, supplied code. Through continuous re-hashing, evaluation, and improvements on tech solutions, 3-D Secure systems can be easily implemented on many different platforms.
Vladimir Karnishin explains:
“The extra step in authentication can be implemented in a wide array of various ways. There is nothing very complicated to adding an ‘open a browser’ route on the iPhone directly from any application without separate windows these days.”
SeeWhy, an evaluation company, conducted a study of 500 U.S. consumers, finding that around 10-12% of the surveyed users refuse payment by credit card when they see the 3-D Secure logo. Some common reasons for payment refusal included AdBlock software being used, the user not knowing their codes, an extra step being unfamiliar, incorrect implementation, no follow through when waiting for their SMS, or not ability access their SMS.
The main reason that this payment method is not widespread especially in the United States is the prevalent presence of familiar and reliable alternatives such as PayPal. This online payment service is notably protected and does not required any additional kind of authentication beyond a credit card. This can, in part, explains PayPal’s popularity in the realms of game payments.
Summary of Pros and Cons
Many experts claim that 3-D Secure may not be as negative as players and payers in the United States and elsewhere may believe. One additional processing step at the time of purchase does not usually cause many issues with global users.
“3-D Secure is by no means a cure-all for credit card security and online games payments in particular, but adds just one step during a secure payment. However, anyone who looks at the transaction history will tell you that it’s a fact people pay attention to this decision and it can sway them. There are clients who see this added technology negatively, even warily, but there are also many people who are not ready to give their money over to a service where little attention is paid to its authorization.” – In summation, Vladimir Karnishin explains user ambivalence in regards to 3-D Secure requirements.