Realm Digital explains how 3D Secure is affecting SA online stores

© Maksim Kostenko – 123RF.com

The onset of compulsory 3D Secure implementation on 1 March 2015, for all online stores meant that the CVV number would no longer be sufficient for making secure online purchases. This was largely driven by the Payments Association of South Africa (PASA) and backed by multiple large banks, lobbying that the increased security would ensure less fraudulent activity on credit cards and benefit the e-commerce landscape in SA in the long run, due to more positive online purchasing experiences.

There was significant push back by local online retailers that felt the knock of the implementation immediately when abandoned carts became almost epidemic.

"The advent of 3D Secure is a catastrophe for small and medium-sized businesses that intend to offer online buying and selling - but especially for entrepreneurs, as it presents an almost insurmountable obstacle to people starting up new e-commerce enterprises. The only good that can come from a so-called 'security' measure as retrograde as 3D Secure is that it may hasten the rise of alternative digital payment solutions that dis intermediate the banks, leaving them holding their liability-shifting, anti-consumer policies like tattered hats," said Ben Williams, Head of Books and e-commerce of Times Media Live.

Do the banks have a point?

The question remains whether PASA and banks had good reason for implementing stricter safety measures. According to a survey by Effective Measure for 2014, 36.76% of users quoted that they did not trust online payment systems as their reason for not purchasing online in the past. The same study revealed that 38% of users' preferred payment type for online purchases was a credit card, this was also the most popular method by at least 10%.

3D Secure puts the onus on the consumer to ensure that the transaction is not a fraudulent one. Before the One Time Pin anyone with stolen credit card details could make unauthorised payments. Often the financial costs of fraudulent activity are impossible for the banks to regain and with each new fraudulent credit card transaction came more apprehension by the online purchasing community.

If it's for their own good, what causes the drop-off?

"Customers that are new to online shopping may feel apprehensive when they are at the crucial point of checking out and then suddenly get pop-ups directing them to complete transactions on another (their bank's) site. At this point, some may cancel the transaction. Realm Digital made sure that online prompts at the time when the 3D secure kicks in are well labelled with our logos, as well as pop-up information that make the transition smoother for our customer to confirm their spend with their bank," commented Melvin Kaabwe, Digital Manager of Van Schaik Bookstore.

3D Secure also relies on the fact that mobile service providers can expedite the PIN to a consumer's phone, that emailed PINs do not go straight into spam folders, and that each consumer has set up his card for 3D secure with his bank prior to making online payments.

"Online purchases using credit cards took a long time for the general population in SA to be comfortable with inputting their details onto websites; security and certifications like Thawte and Verisign helped to boost online commerce in the long run for SA. 3D secure making online shopping safer may have a devastating initial release with a steady incline of e-commerce to follow," commented Senior Solutions Architect, Clint Lynch of Realm Digital.

There are some things e-commerce retailers can do to curb abandoned transactions.

Whether you are pro 3D Secure or not, it is here to stay and there are ways to react as an online store that can help you decrease the drop-off rate for purchases. The primary solution is to educate and, thus, allay the fears of your client base of the changes in process. Using your direct channels of communication, i.e. newsletters, SMS, social media you can emphasise the positives of 3D Secure implementation for the consumer.

Go beyond necessity and create how tos of setting up a card for 3D Secure depending on which bank as well as what 3D Secure payment windows will look like so that consumers can be confident and assured that their details will be safe.