3 Days of 3D Secure – Day 2: China

01st October 2020
Contributor:
Robbie MacDiarmid
Robbie MacDiarmid

Despite a huge 24 percentage point increase in successful transactions (76% vs 52%) compared to the same period last year, China sits at #37 out of 39 countries analysed – overtaking the U.S. and Canada from dead last in 2019.

The only two markets with worse 3DS success rates than China are Canada with 69%, and the U.S. with 58%.

While the proportion of frictionless transactions has decreased (8% vs 12%), and the average time to authenticate has increased (78s vs 27s), the number of failed transactions has decreased from almost half (!) to less than one quarter of all attempts.

One of the key reasons for this dramatic improvement in success rates is clearly the poor starting point in 2019, and the explanation for this is relatively simple: card payments are not king online in China. WeChat Pay and Alipay make up the vast majority of online sales, meaning customers are not necessarily familiar with the card authentication process.

Q: Why has the average time shot up so much?

A: Increased conversion comes at a cost!

In 2019, as around half of all transactions were being rejected or abandoned by the customer, abandonment typically occurs at the first redirect (or new page loading) of 3DS which drags down the average time but of course increases the failure rate.

As customers have become more familiar with 3DS, and with UnionPay moving towards using 3DS2.0, they have stuck with the authentication process for longer: resulting in more successful overall attempts, but also a longer average time spent in the 3DS flow.

Despite this significant improvement, merchants accepting card payments online must scrutinise their failure rates. Although they make up a smaller % of total sales, there is significant scope for optimisation and capture of those ~24% that still typically fail.

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