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What is the difference between 2D and 3D payment gateway?

Thursday, 12 Aug, 2021

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Majority of consumers may know about 3D secure when it comes to online payment via credit/debit cards. However there is still another type of security regarding online transactions which is called 2D secure payment. All those kinds of payment processing are monitored by payment gateways, and there are some points that make these above methods differentiate between each other. Reading the below content to get to know the difference between 2D and 3D payment gateway.

Difference between 2d and 3d payment gateway - 101 Payment gateway uncovering

Difference between 2d and 3d payment gateway - 101 Payment gateway uncovering

1. Understanding about 2D and 3D payment gateway

To help you understand the correct definition of 2D and 3D payment gateway, there may be a basic term that is called “Payment gateway” that should be made clear for you before getting to know the main topic.

1.1. What is a payment gateway?

A payment gateway is a high tech software used by online merchants to accept debit or credit card purchases from online shoppers. This technology collects payment information such as credit/debit card information or credentials for ewallet services from customers and transmits to the processor and the banks by tokenizing these sensitive datas. To make sure data is secured during the transmission between parties in the transaction circle, the payment gateway implements a security system and compliance process that enable strong data encryption. The systems are 2D and 3D payment gateway.

1.2. What is 2d and 3d payment gateway

There are various types of payment gateway providers. 2D and 3D payment gateway (payment gateways) both can be integrated into merchant’s websites or mobile apps as a platform to acquire online payment transactions.

Additionally, 2D and 3D payment gateways also support merchants payment links which can be sent to clients to make payments without website or mobile app requirement.

2D payment gateway (also known as a 2D secure payment gateway) provides online customers a checkout interface that enables them input their basic card details or credentials. After that, the customers are required to enter a fixed secure code from the card issuers or the issuing banks (the CVV) and then payment is processed straight away. following that an amount of money is deducted from the customer's bank account.

On the other hand, 3D payment gateway operates with an extra verification step - OTP (One time password) before the amount of money being deducted from the card holder’s bank account. The extra layer of protection is added to financial transactions on ecommerce or commercial websites.

OTP (One Time Password) is a group of random numbers which is generated and sent to the card holder’s mobile phone via SMS or soft token or even email whenever a new transaction occurs. OTP is valid in a short time from 15 to 30 seconds depending on provider and type of service.

2. The difference between 2D and 3D payment gateway

The table below shows the difference between 2D and 3D payment gateway in the simple explanation to help you understand the 2 concepts easily.

Type of Payment gateway 2D secure Payment gateway 3D secure Payment gateway
Connected parties Customer (Buyer) - Merchant (Online Vendor) Customer (Buyer) - Merchant (Online Vendor) - Payment environment system
Process When an online payment transaction occurs, the 2D payment gateway requires customer input their credit/debit card details including: Card number, card holder’s name, expiry date and CVV (Card Verification Value).
After that, the transaction will be processed by the payment gateway without asking for additional password or security code.
When online shoppers make payment by using credit/debit card, the 3D payment gateway proceeds the online transaction with SCA (Strong Customer Authentication). Customers are required to provide their payment card details including: Card number, card holder’s name, expiry date and CVV (Card Verification Value) and an additional verification step which is known as OTP/3D Secure to enhance safety in online checkout payment.
Customers are protected from fraudulent and cyber crime when shopping online.

3. Learn more about 3D payment gateway

3D secure is an extra layer that the payment gateway provider adds into the payment verification process to enable strong customer authentication when it comes to online credit/debit card transactions. Under the surface, the whole process uses 3 Domains of security protocol involving 3 relevant parties:

  • Acquirer – Acquiring bank
  • Issuer – Issuing Bank
  • Interoperability – the payment environment system ( processor, card schemes, etc.)

Above the surface, customers can see the OTP requirement at the final step. OTP is defined differently depending on the card schemes.

Card issuer brand 3D secure code brand
Visa Verified by Visa
Mastercard Mastercard Secure code
Discover ProtectBuy
American Express American Express SafeKey
JCB International J/Secure

4. Outstanding benefits of 3D Payment gateway

Whether merchants integrate 2D and 3D payment gateway, they all help online businesses approach more clients on ecommerce. However, the ecommerce environment may have some gaps for fraudsters to attack online customers and even merchants. The more strong fraud prevention solution the payment gateway offers for merchants, the better trust and loyalty merchants earn from customers.

The primary advantage of 3D Secure protocol is that online shoppers are protected every time they go shopping online. They can control the purchases that they make online and confirm instantly. If a suspicious payment occurs, customers also receive OTP to their mobile phone or other mobile devices. By reporting the unauthorized transaction and not providing OTP, online shoppers are safe from financial crime attacks.

For merchants, the 3D payment gateway helps their business losses in terms of charge back policy. While an unauthorized transaction is prevented from proceeding thanks to 3D Secure Strong Customer Authentication, merchants can avoid selling products or services to non-liable buyers. As a result, return and refund will be under control and online businesses benefit most from this security operation.

5. PayCEC helps merchant integrate 3D secure payment gateway

PayCEC provides 3D payment gateway services for merchants to integrate the checkout platform into their websites to facilitate online card payments. Below steps help you understand the overview of a 3D secure payment process.

  • Step 1: The shopper chooses an item, and adds it to his/her online shopping cart.
  • Step 2: Customer places an order on merchant’s website by clicking the “Proceed checkout” or equivalent button.
  • Step 3: Website redirects to Checkout page of PayCEC and the customer is required to input payment information.
  • Step 4: OTP process - There is an OTP sent to the shopper's mobile phone and the shopper has to input the one-time-password to enable the transaction.
  • Step 5: The merchant submits the order to PayCEC 3D secure payment gateway.
  • Step 6: The PayCEC payment platform securely sends the transaction to the processor.
  • Step 7: The processor verifies and approves the transaction, and routes the transaction to the card association (Visa / Mastercard / American Express).
  • Step 8: The Card Scheme screens and forwards the transaction details to the customer’s bank, which is known as the issuing bank for approval.
  • Step 9: Approval/Denial is sent back to the Card association and processor and PayCEC payment gateway respectively.
  • Step 10: The merchant receives the message “Transaction Approved”, and the fund is deducted from the customer's bank and settled into the merchant’s bank account.
  • Step 11: The merchant gets paid for the sold item, and the shopper has got his/her purchase.

6. Disadvantages of 2D secure payment gateway and Why merchants should choose 3D secure counterpart

2D and 3D payment gateway are both virtual POSs (Point-Of-Sales), but the way they accept online card payments reflects their pros and cons. Here are some drawbacks when it comes to 2D secure payment gateway operation.

  • Cost for integration and maintenance fees are similar to 3D secure payment gateway.
  • It is easy to cause chargebacks, refunds or disputes due to lack of SCA (Strong Customer Authentication).
  • Negatively impact on revenue due to unsafe payment processing which customers are afraid of in the checkout step.
  • Reduce the reputation of merchants due to lack of fraud prevention mode.

As the above reasons, merchants should integrate 3D Secure payment gateway in order to enable acquiring online payments with FREE Setup fee from PayCEC and instant customer service support apart from email like 24/7 hotline, live chat on merchant account login, live chat on website, personal Relationship Manager contacts.

When businesses scale up globally, the 3D secure payment gateway is a compulsory factor to persuade international customers to make purchases. It is essential because international transactions itself contain a hidden risk rate. Not only the risk affects online shoppers but also merchants too. The 3D secure Payment gateway plays as a first line of defense against cyber crime in the financial and payment sector.

Dealing with chargebacks, refunds and disputes cost business handling time as well as operation cost while having no revenue on these issues. Due to the lack of SCA, payment problems easily occur and businesses would waste significant time on processing and it affects new customers acquisition.

At PayCEC, our team supports online SMEs and Startups integrate 3D payment gateway into their website to accept local and international online payments. We know that starting everything at the beginning is a tough time, and businesses need more support. That is why we help you with FREE integration setup fee and reasonable maintenance fee. On the other hand, SMEs still do not focus on specialization due to the shortage of resources, PayCEC team has a dedicated technical team who will guide you on every single step and care all the way you go.

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PayCEC was established in response to the growing need of businesses to accept online payments more quickly and easily. In the new media era, our payment flow has evolved to work seamlessly and effectively across all platforms and devices. We pride ourselves on combining superior technology with first-class customer service.

PayCEC is a truly global payments platform that not only allows customers to get paid but also withdraws funds to their Business accounts in various currencies.

We have created an open and secure payments ecosystem that people and businesses choose to securely transact with each other online and on mobile devices.

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We are honored to serve as your reliable business partner and financial service provider in the industry and other business-related services. With the help of our professional staff, to help merchants to achieve their goals for the development and expansion of the international business market.

Our payment flow has developed in the e-commerce world to perform seamlessly and effectively across all platforms and devices. We take pleasure in combining technology with customer service, to solve your concerns at the moment.

PayCEC is a fully worldwide payment network that not only allows merchants to be paid immediately and securely, but also allows them to withdraw money in multiple currencies to their company accounts.