3D Secure version 2 (3DSV2/3DS2) is the standard used to comply with Strong Customer Authentication (SCA) mandates under European and UK financial laws like Payment Services Directive (PSD2).
3DS2 requires an additional level of authentication for an e-commerce transaction which aims to prevent fraudulent use of payment cards online.
This means, that when a customer clicks on Pay/Pay Now on a payment page, the 3D Secure window opens.
The customer must authenticate transactions using a combination of two elements.
This could be:
a PIN code or Password set up by the customer
an SMS code sent to the customer's phone or notification through a mobile banking app
Biometrics, fingerprint or facial recognition set up via the phone/app
When a transaction is processed and authenticated via 3DS2, a full liability shift occurs. This means, the financial responsibility behind a fraudulent transactions transfers from the merchant to the card issuer. The card issuer would absorb the cost of the chargeback in the event of fraud.
More information about 3DS and SCA can be found in our developer documents.