The impact of 3DS on Checkout Completion:
A case study

As a Magento development agency, we often have to balance conflicting goals: keeping sites secure, improving the customer’s shopping experience and improving conversion rates and other revenue-related KPIs. 

One of the more recent advancements in online payment security is 3D Secure (3DS), a fraud prevention measure designed to add an extra layer of authentication to online transactions. 

While this technology offers non-negotiable protection, it can also create friction at the checkout stage, affecting conversion rates. 

In this post, we’ll look at the importance of 3DS, its potential impact on checkout completion rates, and how we helped our client Choice reduce 3DS requests to improve conversion without exposing themselves to fraudulent transactions. 

The Importance of 3D Secure and SCA

3D Secure was introduced as a means to reduce online payment fraud by verifying the cardholder’s identity during the transaction process. 

While 3DS has been around for a while technically speaking, its usage has become more popular with the introduction of PSD2 (European Union’s Revised Directive on Payment Services). 

Under PSD2, Strong Customer Authentication (SCA) is a mandatory requirement for online payments within the European Economic Area (EEA) – this includes the UK too. 

SCA mandates that at least two of the following authentication methods must be used for online transactions: something the customer knows (e.g., a password), something the customer owns (e.g., a mobile device), or something the customer is (e.g., a fingerprint).

By adding an extra step in the payment flow, 3DS makes it more difficult for unauthorised users to complete a transaction with a stolen card. 

This added security has become increasingly important as online shopping continues to grow in popularity and fraudsters become more sophisticated.

And did we say this is now mandatory? 

The impact of 3DS on checkout completion rates. 

But it’s not only fraudsters that are struggling with the 3DS protocol. 

The Implementation of 3DS can create friction for customers during the checkout process. 

Have you ever got to the very end of checkout to face the 3DS pop-up, only to realise that your phone was dead, misplaced or left in the bedroom (while your partner sleeps)? Exactly. 

This friction can lead to abandoned carts, decreased conversion rates, and ultimately, lost sales. 

Therefore, it’s crucial to strike a balance between maintaining robust security measures and eliminating barriers to conversion. 

How 3DS was harming Choice’s completion rates, and what we did to fix it. 

Choice Shops operate a number of Magento sites across various sectors such as healthcare and gardening. 

Choice’s demographics on its healthcare site range between 65 and 85 years old. Given that these customers might not always carry their phone with them, many customers found the 3DS authentication process confusing or challenging, leading to a higher number of rejected transactions. 

As a result, Choice’s customer service team started noticing an ever-increasing number of customers who were calling to complain about not being able to pay. 

With our deep knowledge of payments through our work with PayPal’s Braintree Magento extension, we set out to work. 

We implemented a 3DS exemption option that allowed Choice to request an exemption for each transaction. Although the exemption is still subject to the bank’s discretion, it significantly reduced the number of 3DS requests. 

In the last two months, we noticed a 77% reduction in 3DS rejections after implementing the exemption.

This translated to an increase of around 300 orders per week, or a 4% increase in sales. Considering that this is the very last step in the purchase funnel, this is a huge win for Choice. 

It’s important to note that requesting a 3DS exemption comes with the shift of liability for any fraudulent transactions back to the merchant. 

To mitigate this risk, we set a cap of £100 for exemption requests. Given the low fraud rate in their product category and the increased monthly sales, the exemption strategy has proven to be a successful ROI-driven solution for Choice.

There is little we love more than high-performing checkouts and secure payment processing. If your checkout needs a workout, get in touch.