'3D Secure is not enough'

BRUSSELS | Ingenico Payment Services and the Airline Information Network reveal findings of a study of over 4,500 airline and travel websites on the adoption and use of 3D-Secure. Most websites use 3D Secure in a selective manner to tackle online fraud and increase their revenues. 


3D-Secure is the common name for the anti-fraud and chargeback solutions by the card schemes MasterCard, Visa, Diners & Discover, American Express and JCB. All solutions aim to identify the legitimate cardholder, in real-time, at the moment of online purchase.

In addition to the credit card number and the last three digits of the security code, the shopper must enter a password, such as date of birth (simple authentication) or a dynamic single-use code (strong authentication). This password is verified instantly by the card issuer. 3D-Secure prevents fraudulent use of cards online and protects the merchant from costly fraud-related chargebacks (the genuine card owner reclaiming the money in case of fraud).

Regardless the solution, 3D-Secure offers merchants protection of their card sales, however, is also known to drive down conversion rates if consumers are not able to enter the right password (reasons for abandonment: forgotten password, code-generator not at hand, 3D-secure pop up screen not optimised for mobile checkout, or scares consumers suspecting 'phishing').

Airline & Travel Industry: attractive target

Especially in the online travel and airline industry - with high transaction volume and average ticket sizes and known to rely on its online channels to generate revenues - it is of great importance to minimise fraud but at the same time keep conversion levels up.

Compared to other industries, the average basket value is very high, making it an attractive target for fraudsters. It is therefore essential for merchants in this industry to choose the best use of all relevant fraud prevention solutions, including 3-D Secure authentication.

The contradiction between risk mitigation and sales optimisation requires knowledge and insights on fraud, card-not-present fraud patterns and the fraud prevention tools available. It requires continuous attention to mitigate financial losses, increase sales and, at the same time, create the best shopping experience for every visitor.

Key Findings

The study by Ingenico Payment Services and the Airline Information Network shows some interesting findings as it focuses on the adoption and use by airline and travel merchants across regions. Some of the key findings include: 

  • Adoption of 3D Secure heavily varies depending on regions and countries.
  • 53% of Airline & Travel companies use 3-D Secure in a selective manner: 46% of these merchants activate 3-D Secure based on real-time risk assessment, while 54% activate 3D Secure based on card country.

Great differences in 3D-Secure uptake

The study shows the disparities in the use and adoption of 3-D Secure around the world. While in some countries such as The Netherlands or the United Arab Emirates more than 60% of card transactions go through the 3-D Secure authentication process, less than 5% go through this same process in the United States, Brazil or Mexico.

Significant highlights and lowlights

Key findings also reveal significant highlights and lowlights reported by businesses using 3D Secure: while 49% of informed respondents report a decrease of more than 50% of chargebacks when they use 3-D Secure, 61% see an increase of more than 10% of their drop-off rates.

Flexible 3D-secure: risk score based authentication

The increase in drop offs explains why most businesses use 3D Secure in a flexible manner. 31% of online merchants use 3-D Secure all the time, 53% use it flexibly and 16% of them do not use 3D Secure. Among those using 3D Secure selectively, 46% request 3-D Secure authentication based on a risk score, and 54% based on card country. The objective for businesses is to get the benefits of 3D Secure while mitigating the negative impacts.

Ingenico Payment Services offers a tool - called Flex3DS - that provides merchants a solution to activate and deactivate 3D Secure based on context. For example, merchants using Flex3DS easily define the activation of 3D Secure based on the risk associated with the transaction. They can set parameters based upon the issuing country of the card used, the purchase amount, the channel, and many more. It allows merchants to get in control over their card fraud management - allowing them to mitigate fraud and make the most of every genuine visitor.

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3D Secure is not enough

“The purpose of this study was to give Airline and Travel e-businesses a better view of common practices and usages of 3D Secure,” explains Ludovic Houri, VP Product & Payments at Ingenico Payment Services.

“The challenge for these businesses is to define which combination of fraud prevention solutions should be used to optimize their fraud-conversion balance, based on the payment context. As the study points out, 3D Secure is not enough to tackle online fraud but helps mitigating risk in certain cases, specifically when combined with a transaction risk analysis tool.”

Average profit margin

“We worked with Ingenico Payment Services to conduct the 3-D Secure survey because network airlines have an average profit margin of 2% in a good financial year. Getting a handle on online fraud goes a long way to increase this margin and enabling the airline industry to remain sustainably profitable,” explains Christopher Staab, Managing Partner at Airline Information. Break

Study Methodology

To better understand 3-D Secure adoption and practices according to country, merchant location and business type, a total of 106 merchants responded to the survey, and over 38 million transactions made between January 1 and November 15 2014 were reviewed, covering 4601 Airline & Travel industry online stores.

About Ingenico Payment Services

Ingenico Payment Services provides a comprehensive range of secure payment services to enable merchants to consolidate payment channels and optimize financial services. Supporting 150 international and local payment methods, Ingenico Payment Services helps merchants to manage, collect and secure payments and prevent fraud on digital transactions. Ingenico Payment Services is part of the Ingenico Group. Check out Ingenico Payment Services Profile on About-Payments.

The Airline Information Network

Airline Information is an established innovator in commercial aviation conferences. Since 2005, Airline Information has hosted thousands of airline and travel professionals at the company’s conferences, forums, workshops and networking events. Airline Information is also home to the airline industry’s most forward-thinking research in loyalty and merchandising.

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Article sourced from Ingenico Payment Services, March 31st, 2015
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