3D secure is a system where, after you enter your credit card details on a merch

Question

3D secure is a system where, after you enter your credit card details on a merchants site, you are redirected to a site hosted on the bank servers where you enter a OTP sent via SMS to complete the transaction.

However, this system is only used by sites hosted in India and a few other countries. Doesnt this render the system completely ineffective (and possibly make the situation worse than not having it at all)? I cant really figure out how this reduces the risk of fraud in any way for credit cards (Debit cards cannot be used internationally online, so it does reduce the risk there)

Explanation / Answer

No not really.

First of all most banks have a system that likely uses big data to predict your spending pattern. This means any suspicious purchase abroad is likely to get rejected even without 3D secure.

3D Secure is a good way to protect since it provides 2 step verification with a OTP. In UK we have a system with the same name but we simply set a password to use online. This system effectively allows for a better fraudulent check without user typing the pin of his/her credit card which is extremely dangerous to do online.

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