3DS Support for Better Fraud Management

July 27, 2023

Nick Hu
Product Manager

Joe Koenig
Partnerships Innovation Lead

Table of Contents

Introduction

Today, we are expanding our fraud offering with two new ways for Lithic card programs to participate in 3-D Secure (3DS) in beta. We built the Lithic platform to give customers maximum control and visibility into their cardholder’s transactions, and we know that properly managing fraud can be an unlock for scaling their programs. To-date, we’ve equipped our customers with critical tools to prevent unauthorized use of their cards including:

• Real-time authorization decisioning via Auth Stream Access and comprehensive transaction metadata such as the network risk score
• Dynamic spend controls with Auth Rules
• Visibility into program activity with event webhooks such as Card Creation or Card Transaction webhooks
• Control over digital wallet tokenizations, with two-factor authentication
• Best-in-class dispute support via API or Dashboard

We are excited to release the next piece of our fraud offering with 3DS. 3DS is a fraud prevention protocol for e-commerce transactions that enables merchants to verify a cardholder's identity with the issuer before sending a purchase authorization. If the issuer authenticates the cardholder, it agrees to accept liability shift if the purchase authorization is approved. Participating in the 3DS flow enables card programs to better manage liability shift and prevent overall fraud losses.

How Programs Can Use 3DS to Fight Fraud While Improving the Cardholder Experience

• Making better authorization decisions with new data elements: By participating in 3DS, card programs gain access to 30+ new data fields about a transaction and the person initiating it, such as the email address provided at checkout and the time zone of the person's browser. Leveraging this data can enable meaningful improvements in assessing transaction risk and authorization decisions.
• Maximizing authorization approvals while protecting against liability shift: In the past, card programs had two choices if they saw that liability had shifted on a transaction: approving the authorization and potentially being left holding liability if it turned out to be fraudulent, or declining the authorization and potentially frustrating a legitimate cardholder. By participating in 3DS, a card program can now decline the 3DS authentication and liability shift while subsequently approving the authorization, allowing the transaction to go through while still protecting against fraud.

Two Ways for Card Programs to Participate

• Lithic Decisioning: Lithic receives 3DS authentication requests, runs rules to determine the risk level, and responds on the card program’s behalf. The card program is not required to provide a real-time response to these authentication requests.
• Customer Decisioning: Lithic receives 3DS authentication requests, forwards them to the card program's endpoint containing the most important data elements, receives a decision, and passes it back to the card network. Customers have one second to respond with their decision of whether or not to approve the authentication.

Both of these options leverage “frictionless flows”, meaning they do not involve cardholder interaction and no friction is introduced during the transaction.

Getting Started

All Lithic card programs are eligible to participate in 3DS. Check out our documentation for more details about how you can leverage 3DS for your use case. Inquire with your Implementation or Customer Success Manager for more information about pricing and next steps.