What you need to know
Card schemes and regulatory agencies around the world are taking action to make payments safer and more secure for cardholders. For example, the European Commission issued the Revised Payment Services Directive (PSD2) governing electronic payments within Europe. PSD2 includes a mandate that requires banks to perform strong customer authentication (SCA) for online payments.
Most regulations apply to issuing banks and not to you as a merchant, however, you will get the risk of getting lower authorisation rates if an issuing bank evaluates a transaction as non-compliant, and refuses the transaction as a result.
What you need to do
To make sure that your transactions comply with regulations like PSD2 SCA, you need to implement 3D Secure, an authentication protocol developed by EMVCo and supported by major card schemes.
We recommend that you become familiar with guidance from regulatory agencies, card schemes, and with EMVCo specifications. In addition, we as your payment service provider will provide further guidance to help ensure that while you are complying with regulations, you are also maintaining a good online payments experience for your shoppers. For example, we have a comprehensive PSD2 compliance and integration guide where we describe how PSD2 SCA may affect different business models.
The next sections describe the following topics on regulations and online payments authentication in general:
- Summary of existing regulations around the world: Get to know local directives depending on the country/region you are operating from.
- Important dates: See the current schedule for regulation implementation and 3D Secure changes.
- 3D Secure protocol for regulation compliance: Check how you can comply with authentication regulations using 3D Secure 2.
- 3D Secure 2 implementation options: Support 3D Secure 2 with Adyen—find out how to get started today.
Overview of existing regulations
Here are examples of existing regulations that may apply either to you or to issuing banks if you are conducting business in the following regions:
See PSD2 SCA compliance and implementation guide for more information on actions that you need to take to comply with the EU directive.
- Australia: AusPayNet regulations require merchants above fraud thresholds to apply SCA by Q4 2019. This applies to merchants with above AUD 50,000 in fraud losses and with fraud-to-sales ratio of 0.2% and above for two consecutive quarters. If you exceed the fraud thresholds, you need to implement 3D Secure 2.
- Europe: The Revised Payment Services Directive (PSD2) requires European banks to use strong customer authentication (SCA) for online banking and online payments transactions within EEA, excluding out-of-scope transactions and exemptions.
- India: In India, banks are required to perform authentication on all domestic ecommerce transactions.
- Malaysia: In Malaysia, issuing banks may require authentication on their BINs, otherwise, authorisation rates will be low.
- Japan: In Japan, merchants and acquirers must ensure SCA is applied to all domestic and cross-border credit card online payments. This is limited to shopper-present or customer initiated transactions. Digital wallets are excluded from this regulation.
- France: The French Central Bank has advised French issuers to accept authorization exemptions only up to EUR 100 per shopper per day, whether considered on an individual transaction or cumulative basis. This does not impact exemptions requested via EMV 3DS. For more information, see 3DS Guidance for France.
Important dates
The following are dates from regulatory boards and card schemes, specifying when regulations will take effect.
2025
- April 01, 2025: According to Japan Strong Customer Authentication security guidelines, merchants processing card payments must apply 3D Secure 2 on all transactions.
2024
- June 30, 2024: Bancontact (BCMC) stops supporting 3D Secure 1. Transactions will perform authentication with 3D Secure 2 (EMV 3DS).
- July 01, 2024: Mastercard deprecates 3DS 2.1.0 and expects volumes to be fully migrated to 3DS 2.2.0.
- September 24, 2024: Visa deprecates 3DS 2.1.0 and expects volumes to be fully migrated to 3DS 2.2.0.
- October 14, 2024: The French central bank advises French issuers to limit authorization exemptions to EUR 100 per shopper per day in total.
2023
- October 13, 2023: American Express and Diners stops supporting 3D Secure 1 in India. Transactions will perform authentication with 3D Secure 2 (EMV 3DS).
- November 16, 2023: Mastercard stops supporting 3D Secure 1 in India and Bangladesh. Transactions will perform authentication with 3D Secure 2 (EMV 3DS). Mastercard's previous deadline for deprecation was October 3, 2023.
- November 16, 2023: Visa stops supporting 3D Secure 1 for domestic transactions in India, Bangladesh, Nepal, Bhutan, Maldives, and Sri Lanka. Transactions will perform authentication with 3D Secure 2 (EMV 3DS). Visa's previous deadline for deprecation was October 12, 2023, this has now been updated.
For more information on liability shift rules once you have implemented 3D Secure 2, see 3D Secure 2 chargeback liability shift rules.
Use 3D Secure for compliance
3D Secure is an authentication protocol that provides an additional layer of verification for card-not-present (CNP) transactions. The protocol is compliant with authentication regulations, including the SCA mandate from PSD2.
3D Secure 2 : The card issuer performs the authentication within your website or mobile app using passive, biometric, and two-factor authentication approaches. For more information, refer to 3D Secure 2 authentication flows.
3D Secure chargeback liability shift rules
When you implement 3D Secure 2 authentication, you can avoid the liability for chargebacks in case of fraud (for example, chargeback claim due to lost or stolen card), this is called a liability shift.
The general rule is if a shopper successfully completes a 3D Secure 2 challenge authentication flow, the liability for fraudulent chargebacks shifts from you to the card issuer. In a challenge flow, the issuer requires additional shopper interaction. In some regions, card schemes may grant liability shift after a successful frictionless flow, where the transaction is approved after a passive authentication.
The following tables show the liability shift rules for Visa and Mastercard. Note that the general rule applies to the transaction types, unless specified.
Visa liability shift rules
| Countries/regions | Period | Transaction type | Liability shift applies? |
|---|---|---|---|
| EU | Before 14 March 2020 | 3D Secure 2 transaction with an issuer that supports 3D Secure 2. | Yes |
| After 14 March 2020 | 3D Secure 2 transaction regardless of whether the issuer supports 3D Secure 2. | Yes | |
| Brazil | From 15 August 2019 | 3D Secure 2 transaction. | Yes |
Canada, LATAM | Before 15 August 2019 | 3D Secure 2 transaction. | No |
| After 15 August 2019 | 3D Secure 2 transaction successfully completed through either frictionless or challenge flow. | Yes | |
| APAC, MEA | Before 18 April 2020 | 3D Secure 2 transaction with an issuer that supports 3D Secure 2. | Yes |
| After 18 April 2020 | 3D Secure 2 transaction regardless of whether the issuer supports 3D Secure 2. | Yes | |
| US | Before 31 August 2020 | 3D Secure 2 transaction with an issuer that supports 3D Secure 2. | Yes |
| After 31 August 2020 | 3D Secure 2 transaction regardless of whether the issuer supports 3D Secure 2. | Yes |
For Visa transactions, the chargeback protection is valid for 90 days.
For US domestic Visa transactions, there are rare cases when the issuer might fail to validate the Cardholder Authentication Verification Value (CAVV) meaning that the transaction does not qualify for a liability shift even though the Electronic Commerce Indicator (ECI) 05 (3DS authentication was successful) value was provided.
CAVV reuse exceptions for Visa
Travel booking agents usually have multiple merchants related to the same booking. Merchants who split the shipment of a shopper order into multiple authorizations require a Cardholder Authentication Verification Value (CAVV) for each transaction if they want to maintain fraud liability protection or to process the transaction without further authentication.
In these scenarios, Visa rules in Europe allow for a CAVV to be reused up to five times. However, this rule which was due to expire on September 1, 2020 is now extended to September 1, 2022. In case it is been more than 90 days between the original authentication date and when the authorization takes place, then the CAVV will not provide liability protection. To avoid SCA again, a new CAVV can be obtained via 3DS Requestor Initiated (3RI) authentication to refresh the liability protection, if needed.
To support scenarios like multi-shipments or multi-party travel bookings until there is wide support of 3RI authentication in Europe, exceptions allowing a CAVV to be reused up to five times are permitted under the following conditions:
- Territory: European Economic Area (EEA) transactions only
- 3D Secure Version and Time:
- 3D Secure 2.1 transactions from September 2, 2019 to September 1, 2022
- 3D Secure 2.2 transactions effective immediately to September 1, 2022
- Transaction Type and Usage:
- A CAVV obtained via a booking agent can be reused in up to five authorizations by different merchants when related to the same booking.
- Merchants may use the same CAVV up to five times to enable authorizations for split shipments associated with the same purchase. However, as the transaction has been authenticated, it is allowed to have fraud liability protection for each shipment, but for this, the CAVV must be present in each authorization. For fraud liability protection, the merchant has the option to populate the CAVV.
Mastercard liability shift rules
| Countries/regions | Period | Transaction type | Liability shift applies? |
|---|---|---|---|
| Brazil | From October 2018 onwards | 3D Secure 2 transaction. | Yes |
| EU | Between April to September 2019 | 3D Secure 2 transaction with an issuer that supports 3D Secure 2. | Yes |
3D Secure 2 transaction with an issuer that does not support 3D Secure 2. | Yes, but only if the issuer is unable to respond to a 3D Secure 2 call due to technical reasons. | ||
| From April 2019 onwards | PSD2 SCA out-of-scope transactions that were not authenticated with 3D Secure 2. | No | |
| 3D Secure 2 transactions where merchant or acquirer requests for a PSD2 exemption and the issuer grants an exemption. | No | ||
| From September 2019 onwards | 3D Secure 2 transaction. | Yes | |
| 3D Secure 2 transactions where issuing bank applies a PSD2 exemption without the merchant or acquirer requesting for it. For example, issuer TRA. | Yes | ||
Countries/regions with existing regulations that require 3D Secure implementation:
| Before October 2019 | 3D Secure 2 transaction. | No |
| After October 2019 | 3D Secure 2 transaction successfully completed through either frictionless or challenge flow. | Yes | |
Non-EU regions and countries not listed in the previous row:
| Before October 2019 | 3D Secure 2 transaction. | No |
| After October 2019 | 3D Secure 2 transaction successfully completed through either frictionless or challenge flow. | Yes |
For Mastercard transactions, the chargeback protection is valid for 30 days. Starting from 2020, Mastercard will extend liability shift validity to 90 days.