3D Secure Payment Authentication Market Size, Share & Trends Analysis Report By Component (Merchant Plug-in, Access Control Server), By Application (Merchants & Payment Gateway, Banks), And Segment Forecasts, 2022 - 2030

Report Overview

The global 3D secure payment authentication market size was valued at USD 1.02 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 12.2% from 2022 to 2030. The growth of the industry can be credited to the rise in fraudulent online activities, such as unauthorized card use and identity fraud. For instance, in December 2021, according to a report titled Authenticating Identities In The Digital Economy published by PYMNTS.com, 10% of surveyed consumers in the U.S. reported an incident of fraud involving their credit or debit card accounts. While the aggregate percentages of impacted customers may appear low but taken in context with the Federal Trade Commission, which reported 45% of reports in the U.S. in 2021 for money lost to social media scams were about online shopping.

3D secure payment authentication provides clients benefits, such as minimizing the risk of card payment fraud by assuring that customers are utilizing the appropriate card details, thereby providing a safe authentication step before customers can shop online. Furthermore, the widespread implementation of 3D secure payment authentication in e-commerce platforms is expected to drive the industry over the forecast period. In addition, online fraudulent activities are increasing due to a rise in e-commerce and online shopping trends. Thus, a rise in such trends is anticipated to create an opportunity and demand for the market over the forecast period.

Technological advancements in the areas of payment authentication technology have led to a highly competitive market as the population is getting attracted toward digital technologies. The increasing adoption of digital technologies for making payments is resulting in the rise in the implementation of authentication technologies. The development of such a mechanism is attracting a significant share of end-users, which is fueling the growth of the industry. For instance, in the Czech Republic in 2019, the acceptance for 3D secure authentication is 81% and almost 76% of online payments are made using cards.

The growing launches of 3D secure payment authentication solutions in the market are further anticipated to drive the growth of the industry over the forecast period. For instance, in August 2020, Marqeta Inc. announced the launch of a 3D Secure (3DS) solution. With this launch, the company aimed at providing a flexible solution for issuers to create tailored cardholder authentication experiences helping them reduce online fraud. Furthermore, the growing partnerships and collaborations between the market players and the technology companies also bode well for the industry's growth. Though the market is expected to grow over the forecast period, some challenges are anticipated to restrain its growth.

For instance, when the 3D secure payment was introduced, the satisfaction of merchants and customers was low owing to the obtrusive and slow process. This, in turn, irritated merchants as they were losing sales owing to the extra steps required to follow while processing the e-commerce transactions. Thus, to resolve such issues and gain market share, 3D Secure 2.0 was introduced by card issuers. However, as payment systems become more autonomous, there is a larger need for standardization and automation across intrabank and interbank networks between nations. As a result, it is expected that the adoption of 3D secure payment authentication services would be constrained.

COVID-19 Impact Analysis

The COVID-19 pandemic positively impacted the industry. The growth can be attributed to the factors, such as an increase in digital transformation among banks leading to a rise in digital payments. For instance, according to a study by Times of India, digital payment in India is expected to grow three-fold to touch USD 1 trillion by the year 2026 compared to USD 300 billion in 2021. Thus, arise in digital payments is expected to drive the demand for payment authorization systems.

Component Insights

The merchant plug-in segment dominated the industry in 2021 and accounted for the largest share of more than 38.85% of the global revenue. Merchant plug-in is one of the most important elements that performs 3D secure pay authentication and verification of credit and debit cards, thereby expected to grow over the forecast period. The growth of the merchant plug-in segment can be attributed to the increasing adoption and introduction of merchant plug-ins in the offerings by various companies. For instance, GPayments Pty. Ltd. offers a 3D secure merchant plug-in under its ActiveMerchant offering. Total System Services LLC also provides Payment Gateway & Merchant Plug-In as a solution to acquirers.

The access control server segment is anticipated to witness the fastest growth over the forecast period. The access control server is utilized by issuing banks to process cardholder authentication requirements. The growth of the access control segment can be projected due to the factors, such as a rise in the need for identity verification while processing digital transactions owing to a rise in identity fraud. Furthermore, the access control server software module adds an extra level of security to credit card transactions by enabling cardholders to validate their identity using a personally determined password. The solution is offered by several companies including AsiaPay Technology, Worldline, and GPayments Pty. Ltd. among others.

Application Insights

The banks segment reported the largest revenue share of more than 59.70% in 2021. The segment’s growth can be attributed to the increasing digitalization across the banking industry. In September 2022, Bankrate, LLC mentioned that around 65.3% of the U.S. population uses digital banking services. Thus, the higher the use of digital banking and online card transactions, the greater the need for fraud prevention in the banking sector. Furthermore, 3D secure payment authentication enables banks to view customers’ transaction history, and behavioral history and provides information about the users’ devices. The aforementioned factors are expected to fuel segment growth over the forecast period.

The merchants & payment gateway segment is anticipated to witness the fastest growth rate over the forecast period. The increasing popularity of 3D secure payment authentication across the globe is anticipated to drive the segment’s growth. For instance, according to PaymentsCM LLP, as of 2019, the global average acceptance rate of 3D secure is 70%. Furthermore, the development of the 3D secure technology by upgrading it to 3D secure 2.0 has resulted in decreasing cart abandonment rates. Thus, such advancements and acceptance of 3D secure for fraud prevention are anticipated to drive segment growth.

Regional Insights

North America dominated the global industry in 2021 and accounted for the largest revenue share of more than 28.90%. The growth can be attributed to a rise in Card Not Present (CNP) frauds across North America. Merchants across the U.S. and Canada are increasingly adopting 3D secure payment authentication to prevent CNP fraud. For instance, according to the Paypers BV, around 37% of all CNP transactions in America were protected by 3DS, up from just 10% in Q3 2020. Furthermore, the dominance of the market players offering 3DS solutions across the region is also a major factor responsible for the region’s growth.

Asia Pacific is expected to witness the fastest growth rate over the forecast period. The growing population and increasing adoption of CNP across the region for processing contactless payments are expected to fuel the regional market growth. Furthermore, prominent companies, such as Visa Inc., have issued guidelines for rolling out EMV 3DS for the Asia Pacific region. In addition, the rising payment and CNP frauds across the region are also expected to fuel the market growth in Asia Pacific over the forecast period.

Key Companies & Market Share Insights

The industry is moderately fragmented due to the presence of several predominant companies. Industry players aim at new product development initiatives as part of their efforts to develop their offerings. For instance, in January 2022, Everlink Payment Services Inc. announced that it completed 3D secure certification. As a result of certification, it introduced 3D Secure Payment Authentication Service through VISA Consumer Authentication Service (VCAS) for both Mastercard and Visa card products. With the launch of the 3D Secure Payment Authentication Service, the company aims at reducing CNP transaction fraud.

To further broaden their industry presence, companies are working on strategic planning, such as partnerships and collaborations. Companies are collaborating with merchants to widespread 3D secure authentication solutions and reduce CNP frauds worldwide. For instance, in May 2019, Adyen, a payments platform, announced that it was selected by Uber Technologies, Inc., for leveraging its solution for 3D Secure. With this selection Uber Technologies, Inc. aimed at providing a seamless and rewarding payment experience to its customers. Some of the prominent players in the global 3D secure payment authentication market are:

• GPayments Pty Ltd.

• Broadcom

• Mastercard

• RSA Security LLC

• Modirum

• Visa Inc

• Bluefin Payment Systems LLC

• Decta

• American Express Company

• JCB Co., Ltd.

3D Secure Payment Authentication Market Report Scope

Global 3D Secure Payment Authentication Market Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the global 3D secure payment authentication market report based on component, application, and region:

• Component Outlook (Revenue, USD Million, 2017 - 2030)

  • Access Control Server

  • Merchant Plug-in

  • Others

• Application Outlook (Revenue, USD Million, 2017 - 2030)

  • Banks

  • Merchants & Payment Gateway

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

  • Asia Pacific

    • China

    • India

    • Japan

    • Singapore

    • Australia

  • Latin America

    • Brazil

  • Middle East & Africa