3D secure is a system where, after you enter your credit card details on a merchants site, you are redirected to a site hosted on the bank servers where you enter a OTP sent via SMS to complete the transaction.

However, this system is only used by sites hosted in India and a few other countries. Doesn't this render the system completely ineffective (and possibly make the situation worse than not having it at all)? I can't really figure out how this reduces the risk of fraud in any way for credit cards. (Debit cards cannot be used internationally online, so it does reduce the risk there.)


This is more a security measure for the vendor. Generally speaking, the vendor gets screwed if the transaction is fraudulent, so verifying the purchaser prior to authorizing the transaction is a big plus for the merchant and may also help improve the rates they get for doing the processing.

It allows for some level of the benefits of card present transactions without having to actually have the card present. (ie, the greater assurance of an authentic, authorized user).


No not really.

First of all most banks have a system that likely uses big data to predict your spending pattern. This means any suspicious purchase abroad is likely to get rejected even without 3D secure.

3D Secure is a good way to protect since it provides 2 step verification with a OTP. In UK we have a system with the same name but we simply set a password to use online. This system effectively allows for a better fraudulent check without user typing the pin of his/her credit card which is extremely dangerous to do online.


Credit card providers manage risk. They seek to find a line between convenience for a client and reducing fraud. The best or most secure way of working might not be a convenient one. Convenience is important as users might choose another credit card aquirer if they are unhappy.

Second of all it offloads part of the risk to the merchant, meaning if fraud happens at the merchant because he did not provide 3Ds, the money can be claimed back from that merchant.

A transaction using Verified by Visa or SecureCode will redirect cardholders to the website of their card-issuing bank. The cardholder may then be requested by their bank to enter a password to be authenticated or an OTP. In most cases the card holder will also be notified (OTP or transaction information sent to their phone). This means the credit card company will be able to act sooner as the user will most likely immediately act upon receiving an unusual transaction notification.

3Ds wants to reduce fraudulent transactions, it does not aim at fully fixing it.

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