Shoppers want online card security they never have to notice

Shoppers want to be protected from card fraud, but they do not want to notice the protection. That is the main point of a piece by Ruby Shipton of consultancy KAE in The Paypers. Her warning for online stores is that blocking real customers by mistake can cost more than the fraud itself.

What shoppers say

The survey numbers look like a contradiction. 42% of consumers are extremely or very worried about fraud, and 93% say they accept extra security steps at checkout or login. Yet 87% say they will abandon a cart if checkout is too difficult. Both are true. People want security, just without the hassle.

The hidden cost

A false decline happens when a genuine purchase is wrongly flagged as fraud. In the US, these are projected to cost merchants USD 118 billion a year. Card-not-present fraud, meaning fraud on purchases made without the physical card, was estimated at above USD 10 billion in 2024.

The damage lasts. 41% of US shoppers never returned to a merchant after a payment was wrongly declined. Fraud hurts trust too: 66% of consumers say they would stop shopping at a retailer where they experienced it.

What 3D Secure does

3D Secure is the system that lets a card's issuer, the bank behind the card, confirm the buyer is the real cardholder. The current version, 3DS2, lets merchants share more than 100 data points about each purchase. According to Mastercard, 90% of 3DS2 transactions need no action from the customer. Liability for most fraudulent transactions also shifts to the issuer.

Where it goes wrong

3D Secure does not decide where friction belongs. Challenge rates vary by issuer and market. French issuers challenge transactions at twice the rate of other EEA markets. The result can feel random. A loyal customer reordering a routine item may be asked for a passcode, while a first-time buyer making a large purchase sails through. Shipton says that kind of arbitrary friction is the most likely to end in an abandoned cart.

Context matters. Customers tend to accept more checks on purchases that feel riskier, such as high-value, first-time or cross-border ones. Entersekt found one in three consumers wanted their bank to use more visible security for infrequent transactions. Meanwhile, Amazon's one-click "Buy now" button is pulling expectations toward near-zero friction.

What merchants can take from it

• Treat security checks as a customer experience choice, not only a fraud rule.
• Look at each transaction in context instead of applying one rule to everyone.
• Track wrongly declined customers, not just fraud losses.

The article is cut off before it finishes its advice for merchants, issuers and payment providers, so its full recommendations are not covered here.