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Is there a difference between authentication and authorization?

Updated: May 8


Yes, the cute puppy was a ploy. Now that we've got your attention, do you know the difference between authentication and authorization? If you're not familiar with 3DS, it's important to know they are two very different things.


Authentication = PAAY's 3DS solution determined that the cardholder is not fraudulent. Their identity was verified by the card issuer. This happens BEFORE the transaction information is sent to the gateway or to the processor for authorization. All transactions that are authenticated by 3DS receive a chargeback liability shift.


Authorization = The transaction was successfully sent through for processing.


PAAY's 3DS solution sends all transactions through for authorization, regardless of whether or not the transaction was authenticated.


When an authorization request is made to to the issuer, various data points like the expiration date, payment amount, etc. are passed along. If the transaction was authenticated by 3DS, the authorization request also includes the 3DS data.


There are a couple benefits to this:


1) If a customer commits friendly fraud the merchant becomes liable for the transaction and loses money - Unless the 3DS authentication data was attached to the authorization.

2) Visa recently conducted a study that demonstrated transactions that are sent for authorization with 3DS 2.1 data have higher authorization rate.


PAAY's 3-D Secure is a software solution designed to protect merchants from friendly fraud by providing a chargeback liability shift off of the merchant and onto the issuing bank. PAAY's 3DS solution utilizes risk-based authentication and is completely frictionless. Everything happens in the background unseen by the cardholder. No pop-ups, no lag time, and no-hassle. Contact PAAY at info@paay.co and start integrating today.

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