September 11th, 2020 by Admin
The chargeback process was introduced more than four decades ago as a consumer-protection mechanism. It was meant to inspire consumer confidence in payment cards, which were still a novel concept at the time. Fast-forward to today, though, and these forced payment reversals have evolved into a significant problem for online merchants.
Chargeback abuse—commonly known as friendly fraud—is a major source of loss. In fact, chargeback issuances resulting from friendly fraud were expected to reach $50 billion annually in 2020, according to Mercator Advisory Group.
Even then, this figure is a low estimate. It doesn’t account for current trends in a post-Covid environment, where we’ve seen a dramatic increase in friendly fraud. These attacks were already up by the end of March, and there’s no sign that they’re going to slow down.
Covid-19 might look like the source of the problem on a superficial level. If we dig deeper, though, we see four underlying factors behind the preexisting upward trend in chargeback filings:
- More fraudsters view the CNP environment as the “channel of least resistance;”
- Inconsistency in technologies and regulations across different markets;
- The rise of mobile banking;
- The response by card networks like Visa and Mastercard.
These four factors carry diverse ramifications for the market. For instance, roughly $118 billion in e-commerce transactions are declined each year, according to Javelin Strategy & Research. Most of these rejected purchases are false positives, meaning the merchant unnecessarily rejected the purchase in hopes of avoiding a chargeback.
Clearly, there’s a growing disconnect between merchants, financial institutions, and card networks regarding how best to address this situation. We can see this reflected in the fact that the rate of chargeback issuances in North America is expected to significantly outpace those in the European market. This is attributed to factors like strong customer authentication protocols required by the Revised Payment Services Directive (PSD2), and more widespread use of 3-D Secure technology.
The pressure is on for industry players to find more comprehensive solutions for chargebacks. These solutions must be data-driven and adaptable, though. Otherwise, the growing disconnect between cardholders, merchants, financial institutions, and card networks will exacerbate existing problems in the market, leading to further losses.
The good news is that, in the meantime, there are strategies merchants can employ to address these concerns. For instance, even though friendly fraud operates by concealing itself behind false chargeback reason codes, it’s still helpful to have a clear understanding of what each reason code means in context.
Merchants can’t avoid friendly fraud in the same way they can detect criminal attacks or eliminate merchant errors. However, they can minimize friendly fraud risk by adopting key best practices, including:
- Notifying customers to remind them about recurring payments;
- Keeping organized and well-documented transaction records;
- Using delivery confirmation when shipping physical goods;
- Providing easy access to round-the-clock, live customer service;
- Providing a quick response to any refund or cancellation requests.
Also, if a merchant identifies a chargeback as friendly fraud, it’s important to engage that dispute through the representment process. This is a complex, time-consuming process, which is why many merchants opt to outsource their chargeback management. It’s still possible to conduct the process with in-house management. However, it will require strong evidence to support the merchant’s case, such as:
- A legible sales receipt
- A tracking number
- Any emails or transcripts of communications you’ve had with the customer
- Delivery confirmation information
- A record of in-store pickup
- Photographic evidence (when available)
This evidence needs to be contextualized with a chargeback rebuttal letter, explaining why the original transaction was valid. Also, merchants are on a tight schedule. In most cases, they have only a few days to provide a response to their acquirer.
Chargeback management can be a difficult and confusing process. But, with the problem of chargeback abuse only set to grow over time, it’s something merchants can’t afford to take for granted.
—Monica Eaton Cardone is the chief operating office and cofounder of Chargebacks911, Clearwater, Fla.
COMMENTARY: What Will the Future Hold for Chargebacks in Digital Payments?
Monica Eaton-Cardone September 11, 2020 Competitive Strategies, E-Commerce, Fraud & Security, Issuing/Originating, Mobile Commerce, Point-of-sale, Transaction Processing
Posted in Best Practices for Merchants, Credit card Processing, Credit Card Security, e-commerce & m-commerce, Electronic Payments, Internet Payment Gateway, Uncategorized, Visa MasterCard American Express Tagged with: chargeback, chargebacks, ecommerce, ecommerce merchant, ecommerce merchants, ecommerce sites, electronic payment, electronic transactions, fraud protection, mobile payment security, strategies, transaction security
September 18th, 2017 by Elma Jane
Smart Security for Smart Businesses:
Safe-T for SMB streamlines the PCI process while providing the layered security needed to protect card data
EMV – Fraud protection at the point of sale
EMV chip technology keeps the consumer’s card in their hand. It also helps protect the business from card-present fraud related chargebacks.
Encryption – Protection of payment card data in-transit
Safe-T scrambles cardholder data using advanced encryption technology, so data is protected at the point of entry, and throughout the authorization process.
Tokenization – Token ID protection of stored payment card data
Safe-T returns a token ID or an alias, consisting of a random sequence of numbers to the point-of-sale so the actual card number is never stored. Token IDs can be used for follow up transactions (i.e. recurring payments, voids, etc.).
Reduced PCI – Protection from complex PCI compliance
Maintaining PCI Compliance can be intimidating – second only, perhaps, to completing your taxes. Safe-T eases this process for customers by reducing the number of PCI Self-Assessment questions by more than 60% from 80 questions to 31.
Financial Reimbursement – Financial protection from a card data breach
Recovering from a card data breach can be costly for a small business. Safe-T offers Card Data Breach Reimbursement to financially protect your customer’s business in the event of a card data breach – regardless of the type of card data breach.
For Electronic Payment Set up with this feature call now! 888-996-2273
Posted in Best Practices for Merchants Tagged with: card data, card present, chargebacks, chip, data, data breach, EMV, encryption, fraud, payment, PCI, point of sale, Security, tokenization
September 5th, 2017 by Elma Jane
It’s true that the travel agencies are high risk. This is because of the high chargebacks by travelers who fail to complete their trips or stays due to a variety of reasons. But, using the right merchant solutions can make a difference.
You want merchant solutions that help you to manage chargebacks, errant transactions, and terminal messages. Additionally, you should be able to integrate your software with services such as Sabre Red, Sabre, Trams or other accounting programs such as QuickBooks and Peachtree.
With NTC ePay, simply create a pay button for any dollar amount. Then send this digital link to your customers via email. The customer reviews the invoice details and enters their payment information to complete payment.
With this service, you avoid the complexities of integrating the software with your shopping cart, the point of sale, or accounting system.
For Electronic Payment Set Up Call Now! 888-996-227
Posted in Uncategorized Tagged with: chargebacks, high risk, merchant, payment, point of sale, terminal, transactions, travel
May 1st, 2017 by Elma Jane
3D Secure Authentication
One of the biggest frustration for e-Commerce businesses has been the risk of chargebacks. If a shopper were to tell their issuers that they did not authorize an Internet purchase with their credit card, the merchant can lose the chargeback and the product.
By using 3D Secure capabilities, merchants get detailed evidence of authorized purchases “authentication data”.
The authentication data, together with an authorization approval gives you a transaction that is guaranteed against the most common types of chargebacks: Cardholder not authorized and cardholder not recognized chargebacks.
3D Secure is a security tool that enables cardholders to authenticate their identity to their card issuer through the use of Visa’s Verified by Visa and MasterCard’s SecureCode services.
3D Secure adds another layer of security to cardholders by preventing fraudulent purchases in an e-Commerce environment and reducing the number of unauthorized transactions.
NTC’s Virtual Merchant users processing transactions in an integrated e-Commerce environment are able to take advantage of this functionality.
3D Secure processing is supported with MasterCard and Visa transactions only. Other card types will process as normal and will not trigger 3D secure processing.
For e-Commerce Electronic Payments set up with 3D Secure
call now 888-996-2273! or click here NationalTransaction.Com
Posted in Best Practices for Merchants, Credit Card Security, e-commerce & m-commerce, Electronic Payments, Visa MasterCard American Express Tagged with: chargebacks, credit card, data, e-commerce, electronic payments, MasterCard, merchant, Security, transaction, visa
April 10th, 2017 by Elma Jane
EMV, NFC, PIN and Signature are not the same
EMV (Europay, MasterCard and Visa) is a payment technology.
NFC (Near-Field Communication) is a technology that enables contactless EMV.
Apple Pay, Android Pay and Samsung Pay uses NFC technology to process payments in a tap at any contactless payment terminal.
NFC payments made with a mobile phone in-store by tapping the phone to an NFC-capable terminal are considered card-present transactions. NFC in-app purchases are considered card-not-present transactions.
Not all EMV terminals has NFC technology. NFC Technology/EMV terminals can be considerably more expensive than standard EMV.
There are EMV terminals that NFC capable but not enabled.
Payment cards that comply with the EMV standard are often called Chip and PIN or Chip and Signature cards, depending on the authentication methods employed by the card issuer.
PIN Debit are transactions routed through (EFT) electronic funds transfer. It immediately deducts the transaction amount from the customer’s checking account, which is linked to the debit card used for payment. EFT processing takes place when the customer chooses debit when prompted and then enters her PIN. PIN debit transactions are often referred to as online transactions because they require an electronic authorization.
PIN Based Transactions have no chargebacks rights as they are considered cash not credit.
Signature-based debit transactions are authorized, cleared and settled through the same Visa or MasterCard networks used for processing credit card transactions. Signature debit processing is initiated when the customer selects credit when prompted by the POS terminal. Signature debit transactions are referred to as offline transactions because a PIN debit network does not play a role in processing.
NationalTransaction.Com 888-996-2273
Posted in Best Practices for Merchants Tagged with: card present, card-not-present, chargebacks, EMV, nfc, payment, PIN, terminal, transactions
April 5th, 2017 by Elma Jane
Fighting chargebacks is important to a business. Whether you process transactions at a point of sale location or operate an e-Commerce business making sure you have implemented a process to dispute your chargebacks is critical.
Basic concepts that can be used to begin learning how to dispute chargebacks:
Keep accurate records of data that is easily accessible. Keeping track of your sales and products have a much easier time in collecting the information necessary to combat a chargeback.
Act quickly, don’t wait! You only have 10 days to respond to a chargeback or retrieval request. If you do not respond in 10 days you lose to a chargeback, and It gets worse; as you will not be able to re-present your case.
Compile and submit the documents to your processor. Make sure the documents have the original chargeback documents attached as well as the other supporting documents.
Follow up to make sure they have been received. Your processor may have an online system that allows you to submit documents directly into the processor chargeback system and some even allow you to view submitted documents in REAL TIME.
Monitor your chargebacks, this will help you understand what processes work for each specific chargeback type.
KEEP YOUR CUSTOMERS HAPPY
NationalTransaction.com 888-996-2273
Posted in Best Practices for Merchants Tagged with: chargebacks, data, e-commerce, point of sale, processor, transactions
March 1st, 2017 by Elma Jane
ELECTRONIC PAYMENTS
When it comes to electronic payments, certain types of businesses are considered high risk.
Most merchants do not realize that electronic payment processors carry a financial risk on merchant accounts, and normally fund merchants prior to receiving payment from the client’s bank.
Essentially, a merchant account is an unsecured loan.
Different factors used to determine when a business is a high risk are:
- Types of products
- Services they sell how
- How they sell them
Online transactions are considered high risk because there are increased risks of fraud.
A key factor used to determine the risk of a business is chargebacks.
Chargebacks include customer refunds and fraudulent transactions.
Payment providers assess this risk to determine the percentage of chargebacks your business is likely to experience.
Businesses that are considered high risk where they take advanced payments:
- Travel agencies
- Ticketing services
Electronic payments provider is necessary if you want to accept debit and credit card transactions.
For high-risk electronic payments please feel free to call us at 888-996-2273.
Posted in Best Practices for Merchants, Travel Agency Agents Tagged with: bank, chargebacks, credit card, debit, electronic payments, fraud, loan, merchant accounts, merchants, online, payment processors, transactions, travel agencies
November 21st, 2016 by Elma Jane
What makes travel merchant high risk?
Travel environments are unique and transactions are usually keyed in. There’s almost always a delayed delivery period, and large ticket transactions.
One card holder may be paying for multiple tickets and they tend to be seasonal; with peak season months generating an unusual spike in their “average” monthly volume and chargebacks, pose a potential threat by travelers who are unable to complete their trip.
These factors can cause for either a reserve or account termination. Therefore travel merchant accounts are considered high risk.
Most merchants do not realize that merchant processors carry a financial risk on merchant accounts, and normally fund merchants prior to receiving payment from the client’s bank. Therefore, a merchant account is an unsecured loan.
The merchant runs a transaction and at the end of the day they settle their batch. The merchant will receive the funds for that batch in their bank account within 2 business days, even though the travel arrangements the client paid for do not take place right away.
Here at National Transaction Corp, we specialize in understanding what makes your transactions as a travel agent unique and how they affect your merchant account.
Educating the merchant and ensuring they have a good understanding of what makes travel merchant account high risk, is one of our specialties.
Call NTC to speak with a Travel Merchant Account Specialist today!
Dial 888-996-2273
Posted in Best Practices for Merchants, Travel Agency Agents Tagged with: bank, card, chargebacks, financial, loan, merchant, payment, processors, transactions, travel, travel agent, Travel Merchant
May 24th, 2016 by Elma Jane
Top terms in your Merchant Statement:
Interchange – are the variable fees charged by the card payment networks for processing transaction. Credit card brands set these non-negotiable rates based on card type, business size, and industry.
Ancillary Fees – this include statement, batch and customer service fees, monthly minimums and more.
Authorizations – this section shows the charges per authorization that come from an interchange plus provider and is then split by card brand and transaction type. On your statement, you will see these charges as either AUTH or WAT charges.
Deposit Summary – following the summary is the deposit summary, where lists of your account activity broken down by day and card type.
Discount Rate – every transaction percentage that is deducted as a fee. Rates are categorized as qualified, mid-qualified and non-qualified.
Processing Services – this states your discount rate charges that you receive from your interchanges plus processor. This is divided by card brand and sales volume.
Summary – summary shows the processed sales by AMEX, Discover, JCB, MasterCard or Visa, as well as the total fees paid in order to process these sales. You can find this at the top of your statement.
Other items included in the summary:
Account adjustments, chargebacks, the breakdown of sales by card brand and number of refunds.
Understanding these terms on your statement will give you the confidence to read your merchant account statement with ease.
Posted in Best Practices for Merchants Tagged with: card, chargebacks, credit card, customer, fees, merchant, merchant account, payment, refunds, service, transaction
May 9th, 2016 by Elma Jane
Double refunds are when a customer is provided with two refunds for the same transaction. Chargebacks can be involved in a double refund.
Double Refunds Happen When:
Chargebacks are filed after a refund is issued. The consumer contacts the merchant and requests a refund, but the funds aren’t returned immediately. The consumer thinks the request for the refund was ignored and files a chargeback. Then both the chargeback and the refund are being processed.
Chargebacks are filed before a refund is issued. The consumer calls the bank and initiates a chargeback. Then, the consumer calls the merchant and expresses dissatisfaction. To try to avoid a chargeback, the merchant provides a refund. However, the merchant has no idea of the fact that a chargeback has already been filed because the consumer calls the bank first
Even thou a merchant provided a refund with a customer that doesn’t guarantee that a chargeback won’t be initiated. Same thing with chargeback that has been filed doesn’t guarantee that customer won’t contact the merchant and demand a refund as well.
Just because a merchant provided a customer with a refund that doesn’t guarantee that a chargeback won’t be initiated. Same thing with chargeback that has been filed doesn’t guarantee that customer won’t contact the merchant and demand a refund as well.
It is possible for the customer to receive a double refund for the one purchase transaction.
Posted in Best Practices for Merchants, Travel Agency Agents Tagged with: bank, chargebacks, consumer, customer, merchant, refunds, transaction