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3DS Exemptions

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Prerequisites

Before implementing exemptions:

Even when SCA is required (Europe) or you want liability shift, certain transactions can skip 3DS. Understanding exemptions is critical for optimizing conversion while maintaining compliance.

Exemption Types​

ExemptionCriteriaWho Decides
Low valueUnder €30 (€100 cumulative limit)Issuer
Low risk (TRA)Based on fraud rate thresholdsAcquirer or Issuer
Recurring/MITAfter initial authenticated transactionMerchant initiates (see subscriptions)
Corporate cardsSecure corporate payment processIssuer (see B2B)
Trusted beneficiaryCardholder whitelisted merchantCardholder/Issuer
Secure corporateDedicated payment processesVaries

Transaction Risk Analysis (TRA) Thresholds​

TRA exemptions are based on your fraud rate. Lower fraud rate = higher exemption threshold.

Your Fraud RateExemption Threshold
Below 0.13%Up to €100
Below 0.06%Up to €250
Below 0.01%Up to €500

Reality check: Most merchants can't claim TRA exemptions because they don't have the verified fraud rate data or the acquirer support.

TRA Eligibility Requirements​

To qualify for TRA exemptions, you typically need:

  • Verified fraud rate data over 90 days
  • Acquirer that supports TRA requests
  • Technical integration to request exemptions
  • Monitoring for fraud rate drift

Exemption Decision Flow​

Exemption Risks​

RiskDescription
Issuer declineIssuer can reject exemption request
Liability stays with youExempted transactions = no liability shift
Ratio impactFraud on exempted transactions counts against you
Cumulative trackingLow-value exemptions have limits

The Liability Trade-off​

When you request an exemption and it's approved:

  • You skip the friction of 3DS
  • You keep liability for fraud on that transaction
  • If fraud occurs, it counts against your fraud rate

This is a conscious trade-off: better conversion in exchange for fraud liability.

When to Request Exemptions​

Request ExemptionDon't Request
Repeat customers with historyFirst-time high-risk orders
Low-value transactionsHigh-value orders
Low-risk profileAny fraud signals present
Conversion-critical flowWhen liability shift matters

Good Exemption Candidates​

  • Subscription renewals - MIT after initial authenticated payment
  • Low-value add-ons - Under €30 with established customer
  • Trusted repeat customers - Multiple successful purchases, no disputes
  • Corporate cards - Secure corporate payment processes

Bad Exemption Candidates​

  • New customers - No history to assess risk
  • High-value orders - Fraud loss outweighs friction cost
  • International transactions - Higher fraud risk
  • Any fraud signals - Velocity, address mismatch, device risk

Implementation Notes​

Ask Your Processor

"Do you support 3DS exemption requests? Which exemption types can we request? How do we flag transactions for TRA?"

Not all processors support all exemptions. Verify:

  1. Which exemptions your processor can request
  2. How to flag transactions for exemption
  3. What data is required for TRA
  4. How declined exemptions are handled (fallback to full 3DS?)

Technical Implementation​

Exemption requests are made during the 3DS authentication request:

ProcessorTypical Field
Stripepayment_intent.payment_method_options.card.request_three_d_secure
AdyenadditionalData.scaExemption
BraintreetransactionSource + exemption flags

Check your processor's documentation for exact implementation.

Exemption Strategy by Business Type​

Business TypeRecommended Approach
SubscriptionsAuthenticate first payment, MIT exemption for renewals
High-frequency, low-valueRequest low-value exemption, accept liability
High-value goodsFull authentication, don't exempt
Return customersTrusted beneficiary (if supported)
MixedSegment by risk, exempt low-risk only

Subscription Best Practice​

  1. Initial signup: Full 3DS authentication
  2. First renewal: MIT exemption (prior consent established)
  3. Subsequent renewals: Continue MIT exemption
  4. Failed renewal retry: May need re-authentication

This pattern gives you liability shift on the initial high-risk transaction while removing friction from renewals.

Monitoring Exemption Performance​

Track these metrics for exempted transactions:

MetricTargetAction if Exceeded
Fraud rate on exempted txnsUnder 0.1%Reduce exemption scope
Exemption approval rateOver 90%Check issuer compatibility
Conversion lift vs. 3DSOver 2%Keep exempting
Chargeback rate on exemptedUnder 0.3%Tighten exemption criteria

If fraud on exempted transactions rises, you're exempting the wrong transactions.

Next Steps​

  1. Check processor support → Verify which exemptions are available
  2. Know your fraud rate → Determine TRA eligibility
  3. Segment your transactions → Identify good exemption candidates
  4. Monitor results → Track fraud on exempted vs. authenticated

See Also​