The importanse of adopting this latest security protocol is vital for electronic commerce in Asia's marketplaces.

In the rapidly evolving digital landscape, the adoption of new technologies is shaping the future of online transactions. One such innovation is the 3-D Secure 2.0 (3DS2), an improved version of the 3DS authentication protocol for card payments.

Nitin Palande, the Head of Sales and Partnerships for Asia Pacific (APAC) at Netcetera, has discussed the trend of adopting 3DS2 by Asian banks and payment services providers. This shift towards 3DS2 is particularly significant in regions like China and Indonesia, where 40% and 30% of internet spending respectively represent new consumption rather than substitutes for in-person purchases.

The digital economy is expected to add US$1 trillion to Asia's GDP in the next ten years, and with 125,000 new internet users being added every day in Southeast Asia, the potential for growth is immense.

3DS2 offers increased security, seamless operation, and a high conversion rate for online businesses. By replacing static passwords with one-time passcodes and biometrics (fingerprint, face, or voice recognition), 3DS2 mitigates password-related risks and provides a more secure environment for transactions.

Shopping cart abandonment, a term referring to potential customers who start a checkout process for an online order but leave the site without completing the order, causes e-commerce brands to lose an estimated US$18 billion in yearly sales revenue. However, the implementation of 3DS2 may help to decrease shopping cart abandonment due to reduced payment transaction time, absence of explicit redirect, and improved support for online web and in-app purchases.

All banks within the EU will have to comply with the new standard for online payments within the Eurozone by the end of 2021. Mastercard and Visa will discontinue support for 3DS1 in October 2022, further emphasising the importance of adopting 3DS2.

Risk-based authentication is used in 3DS2 to reduce friction and provide a more holistic view of each transaction's context. This means that 3DS2 interacts with cardholders only on suspicious transactions, ensuring a smooth and uninterrupted user experience for the majority of transactions.

Compliance with 3DS2 requirements may facilitate global expansion for businesses without drastic compliance hassles. As Asia accounted for 59.1% of global online retail sales in 2020, the adoption of 3DS2 by Asian banks and payment services providers could pave the way for a more secure and efficient digital economy in the region.

The importanse of adopting this latest security protocol is vital for electronic commerce in Asia's marketplaces.