3DS in Latin America: The Good, The Bad, and The Ugly
As card schemes phase out the 2DS protocol, they are pushing for better security. Their answer is 3DS, a technology designed to reduce fraud by adding an extra authentication layer to online payments. While this enhanced security is good news, the full picture for merchants operating in Latin America is far more complex. This guide breaks down the reality of using 3DS in the region.
The Bad: Why 3DS Breaks the Checkout Flow in Latam
The primary downside of 3DS becomes clear in mobile-first regions like Latin America, where it often creates a broken checkout experience. The additional authentication steps can lead to a host of conversion-killing problems, including:
- Confusing page redirects
- Failed One-Time Passwords (OTPs)
- Delays from slow banking apps
Ultimately, these issues result in higher rates of cart abandonment and lower payment approval rates.
The Ugly: The Hidden Cost of Mandatory 3DS
The ugliest truth? You could be losing significant revenue without even realizing it. While it’s true that fraud levels in Latin America are high, making 3DS a safer option than 2DS, forcing it on every single transaction is a fast track to friction. This frustrates customers and ultimately leads to lost sales.
While a smarter strategy involves using a fraud prevention system to apply 3DS only to high-risk transactions, this approach still adds cost and operational complexity.
The Salvation: Making Cards Optional with Local Payments
This is why leading merchants are shifting their mindset. The ultimate solution is not to fix the friction, but to bypass it entirely by making cards optional, not mandatory. Instead, these merchants focus on offering local, instant, and chargeback-free payment alternatives that are already trusted by millions.
These local methods, such as Pix, PSE, Nequi, and various digital wallets, are:
- Faster
- Safer
- Easier to use
- And better for your conversion rate
Bonus Insight: Did you know you can even use Pix for age verification? This eliminates the need for customers to use a credit card just to prove their age, further streamlining the user experience.
If you want to know more about navigating the complex payment landscape in Latin America, talk to the experts at Letpay. We have the industry insights and the numbers to help you expand the smart way. Explore our local payment solutions today.
