There has been an increase in the total number of card-not-present (CNP) transactions. With a 9 percent compound annual growth rate, CNP transactions are on course to become more common than card-present transactions.
Even though these transactions are easy, they pose extra risk to the payment process. It’s much harder to verify the transaction without the card or cardholder being there. According to a survey by Juniper Research, retailers are expected to lose almost $130 billion USD to CNP fraud between 2018 and 2023.
As eCommerce grows at an incredible rate, retailers need to use better ways to stop fraud and identity theft. 3D Secure authentication is a security mechanism that helps merchants protect online transactions and meet the high client authentication standards set by the EU Revised Directive on Payment Services (PSD2). But the catch is, a good chunk of these payments is made on mobile. So, how does 3DS 2.0 become essential there?
What is 3DS 2.0?
But first, we need to understand what 3DS 2.0 is. Three-Domain Secure (3DS), sometimes known as “Verified by Visa,” is an authentication technique that Visa first created in 1999, which EMVCo later standardized. It adds an extra layer of protection to online credit and debit card transactions. 3DS doesn’t just ask for card information and a security code. It also asks the customer to prove their identity by giving an OTP, an extra passcode, or biometric authentication before they can make a payment.
3DS was created to give card transactions better security. However, this added an extra layer of verification to the payment process, such as static passwords or bulky pop-up windows that made payments very hard on mobile devices. Restrictions on data exchange and less compatibility between devices, networks, and platforms all made things harder and hurt the customer experience.
3D Secure 2.0, or 3DS 2.0, fixes the problems with the prior version while still keeping its core purpose of preventing fraud. It is updated to deal with current problems, make things safer, improve the user experience, and make online transactions go more smoothly. This next-generation protocol has advanced features that meet the needs of current e-commerce, like mobile-first compatibility, risk-based authentication, and easy integration across devices.
How Does 3DS 2.0 Work?
Let’s understand how it works in detail.
Enhanced Data Sharing
Merchants now give the card issuer more than 150 pieces of information, such as device ID, geolocation, transaction history, and merchant details. This is a big change from 3DS 1.0, which only sent 15.
Risk-Based Authentication
Issuers employ machine learning to look at shared data and figure out how risky a transaction is in real time. For transactions that aren’t very risky, authentication happens without the customer having to do anything.
Frictionless Flow
The protocol lets customers authenticate low-risk transactions without having to do anything.
Challenge Flow for High-Risk Transactions
When a transaction is marked as high-risk, clients are asked to prove their identity in new ways, such as through biometrics or one-time passwords.
Why Mobile-First Needs 3DS 2.0
Now, why do mobile-first authentication strategies need 3DS 2.0 in the first place? To put it simply, businesses that operate on a mobile-first model should implement 3DS 2.0 because it is specifically compatible with mobile apps and browsers. Because the protocol helps with a frictionless flow, it also reduces the friction on small screens, a problem that mobile-first enterprises face in the first place, especially during checkout when payment is an issue. Also, it works with biometric authentication and one-click authentication, which makes it a super secure, yet convenient option for a mobile-first business.
Key Benefits
How does 3DS 2.0 benefit mobile-first businesses is a question that people have been asking for a long time now. The table below explains the benefits so that it’s easy for you to understand.
| Benefit | What It Means | Why It Matters for Mobile-First |
| Better User Experience → Fewer Cart Abandonments | 3DS 2.0 reduces unnecessary pop-ups and redirects by enabling seamless authentication inside apps or mobile browsers. It also supports biometric methods like fingerprint or face ID. | Mobile users expect speed. If checkout feels clunky, they abandon carts. With smooth authentication, more purchases get completed. |
| Stronger Fraud Prevention | Uses real-time, risk-based authentication by analyzing multiple data points (device info, transaction history, geolocation). Suspicious activity triggers extra checks, while safe transactions stay frictionless. | Mobile payments are a major fraud target. This layered security builds trust without making honest customers feel punished. |
| Compliance with PSD2 and SCA | Meets global regulatory requirements such as the EU’s PSD2 Strong Customer Authentication mandate. Merchants and issuers stay compliant while maintaining usability. | For businesses operating internationally, compliance is non-negotiable. 3DS 2.0 keeps mobile-first businesses safe from penalties while delivering smoother flows. |
| Higher Approval and Conversion Rates | By cutting false declines (legit transactions wrongly flagged as fraud), 3DS 2.0 ensures more successful transactions. The frictionless flow boosts customer confidence. | Every extra step on mobile can lose a sale. With fewer declines and faster checkouts, revenue climbs instead of slipping away. |
Conclusion
Cardless digital payments have surged in recent years, with a large portion happening through mobile devices. This makes 3DS 2.0 essential for mobile payment interfaces. For businesses that operate with a mobile-first approach, 3DS 2.0 is almost non-negotiable. It streamlines the checkout process and significantly reduces fraud risk, a major concern in mobile transactions. With its low-friction design, cart abandonment rates drop dramatically, preventing revenue loss. In short, 3DS 2.0 is a game-changer for mobile-first authentication strategies, and businesses should ensure their payment gateways are fully compatible with it.
