3DS / 3-D Secure: Why Your Bank Sometimes Asks “Is It Really You?”
Ambuj Kumar
Backend
Sep 17, 2025
|
4
min
Table of Contents
If you’ve ever typed your card details, hit Pay, and been popped over to your bank’s app for an OTP or approval, that quick stop is 3-D Secure (3DS). Think of it as the web’s polite bouncer: most people breeze through; sometimes the bank asks for an extra check. Done right, 3DS keeps fraud down without wrecking checkout conversion.
3DS is a fast check between a merchant, the card network, and your bank to confirm the cardholder is the real user. It happens before the charge: when the bank needs more confidence, it prompts the cardholder for a one-time password (OTP) or an app approval. When the bank’s signals are strong, the process is frictionless and nothing shows up to the shopper.
Frictionless vs Challenge- why banks sometimes step in
There are two broad outcomes:
Frictionless: The issuer sees trusted signals, device fingerprint, transaction history, IP/location match, tokenized card on file and silently approves the identity check.
Challenge: The issuer asks the customer to confirm identity (OTP, biometrics, or app approval).
Why does a challenge happen? Common causes:
Regulatory rules: Strong Customer Authentication (SCA) under PSD2 in the EU or Additional Factor of Authentication (AFA) rules in India require extra checks for certain transactions.
Risk signals: New device, unusual geo-location, high order value, or a pattern the issuer’s fraud model flags.
Issuer policy: Some banks are simply conservative and challenge more often.
3DS has evolved (3DS2) to accept richer contextual data so issuers can make smarter risk calls. Sending that extra context increases frictionless approvals, a win for merchants and customers.
How 3DS affects shoppers
When a challenge occurs, it typically takes under a minute. Typical shopper flow:
Checkout prompts the bank to authenticate.
The customer receives an OTP or a push notification and approves.
They return to the merchant automatically and the payment continues.
Good payment UX softens the moment. Show simple messaging like “You’ll receive a bank OTP to verify this purchase,” include a visible countdown, provide a clear “Resend OTP” button, and make app-switch flows seamless on mobile. At Dodo Payments we design for those edge-cases so customers don’t panic and abandon.
A few practical tips:
Always surface expected steps before payment (pre-empt surprises).
Offer alternative payment methods if authentication fails.
Track and log challenge timings so you can optimize retries and messaging.
How 3DS helps merchants reduce chargebacks without killing conversion
When authentication succeeds, liability for certain kinds of fraud often shifts to the issuer. That huge authenticated transactions are harder to dispute successfully. But 3DS can also introduce friction that causes cart abandonment if handled poorly.
Our operational playbook:
Send rich, privacy-safe signals: Pass device, shipping, billing, and order metadata so issuers can approve frictionlessly whenever possible.
Tune per issuer and market: Some banks prefer push approvals; others rely on SMS OTPs. Tailoring flows by country reduces unnecessary challenges.
Use exemptions where appropriate: In regulated regions, risk-based exemptions (e.g., low-value purchases or merchant-initiated transactions) can prevent unnecessary friction, but only when your risk and transaction patterns justify them.
Fail gracefully: If a challenge times out, offer retry options and alternate payment methods immediately so customers can complete the purchase.
Track both fraud rate and conversion rate. Optimize to minimize the combined cost of chargebacks plus lost sales.
Subscriptions, recurring payments, and 3DS (secure checkout nuances)
Recurring billing has special mechanics. For many schemes, the first subscription charge requires explicit customer authentication; subsequent recurring charges may use a stored credential (merchant-initiated transaction) under specific rules. This makes the first checkout the most sensitive moment for subscriptions design UX to set expectations and capture consent (e.g., “We’ll charge you monthly; you’ll confirm the first payment now”).
If you sell trials or auto-renewals internationally, test first-payment flows in each major market to avoid surprise decline or friction.
India & AFA
Sellers accepting Indian cards should expect more visible authentication steps due to AFA requirements. The first subscription payment commonly requires an explicit authentication; subsequent renewals may follow different rules. If you sell into India, plan for an initial customer prompt and communicate it in your UX.
Myths vs Facts: quick clarity on common 3DS misunderstandings
Myth: 3DS always means OTP.
Fact: Many transactions are approved silently.
Myth: Frictionless is unsafe.
Fact: Banks use robust behind-the-scenes signals to decide.
Myth: 3DS always kills conversion.
Fact: Bad UX kills conversion; good 3DS design protects revenue.
Metrics product & ops teams should track (payment UX + security KPIs)
To tune 3DS you need the right signals:
Challenge rate by issuer and country- how often customers are challenged.
Frictionless approval rate- higher is better when fraud stays low.
Challenge success time- how long customers take to confirm.
Conversion after challenge- percent who complete after a challenge.
Chargeback rate for authenticated vs unauthenticated transactions.
Use these numbers to decide where to invest: better messaging, different routing, or alternative payment methods.
Final Note- Secure checkout should be almost invisible
Security shouldn’t feel like homework. The best 3DS flows are the ones customers barely notice. At Dodo Payments we balance safety and speed: keep customers protected, keep checkouts fast, and keep revenue healthy. If you want your checkout to behave like this, let’s talk.
