Considerations on a 3DS 2.0 World

The amount of merchant data which 3DS 2.0 is able to collect is truly large, beyond the capabilities of smaller merchants which may not have the technology and sophistication to collect and present this data.

The end result is that many implementations might opt for a simpler subset of information, forfeiting some of the benefits of 3DS 2.0. Issuers will automatically step up authentication more often for these merchants; these merchants will still benefit from the many frictionless capabilities possible with 2.0.

As with 1.0.2, large merchants will want to control the interaction with cardholders and will therefore integrate directly into the MPI conducting the authentication directly; merchants will then pass on the proof of authentication to their PSP together with their payment request.

3DS 2.0 will put a lot of demands on Issuers. The rise of Fintech over the last decade has been driven by the fact that technology people move and innovate very rapidly, a culture that is incompatible with Banks. Inevitably Fintech companies have transformed themselves directly into Acquirers. It is not unreasonable to see the same evolutionary trends developing on the Issuing side driven by increasingly complex and sophisticated technology and the ability of global brands to reach out directly to consumers in ways which even banks operating locally fail to do. This might well be the lasting legacy 3DS 2.0.

Finally 17 years on – the world is different for one other very important reason and that reason is governments and regulators; regulators will have an ever stronger role in how technology is applied and will play a central role in shaping up the payments industry. The European PSD2 is a prime example of this change and is the topic of the next part of this article.