In Europe, digital retail payments were to be become more secure and less susceptible to fraud with the introduction of SCA. Yet a new standard for competition is being set for payment service providers to create SCA payment flows with minimal friction.
The EU has set the stage with its SCA (Strong Consumer Authentication) regulations designed to make digital payments more secure. The goal of this implementation is to increase the level of security surrounding electronic payments that benefit both consumers and merchants, but is the end result meeting the objective?
More than 36 percent of consumers admitted to falsely claiming a transaction was unauthorized or fraudulent while 31 percent falsely claimed a product never arrived, arrived damaged or was unsatisfactory, according to a recent study. While there is overlap of consumers who have made each of these false claims, this represents a meaningful share of consumers who knowing and willingly committed friendly fraud.
A FinTech lawyer reported that as many as one-fifth of his merchant clients have been contacted by their payment processors about the possibility of increasing their reserve requirements. This comes as Square increased provisions for merchant transaction losses to $79.3 million in the first quarter, a three-fold increase from the same quarter last year.
The pandemic has not only made business more difficult for many merchants, but also the acquiring banks that underwrite their merchant accounts.
While fraudsters are leveraging the pandemic crisis to commit more fraud, the increase in volumes, shipping delays and struggle to manage certain inventory is creating a unique set of problems. If not managed properly, merchants will see an increase in preventable, non-fraud related chargebacks and disputes. Here’s what merchants can do:
Visa announced their acquisition of Verifi on June 28th, about three months after MasterCard announced their acquisition of Ethoca. Both organizations offer issuer alert services that notify merchants of potential disputes before they become chargebacks. Visa’s acquisition comes over a year after overhauling their dispute process while MasterCard is in the process of doing the same.
Guest Post & Case Study by: J. Carlson, Certified eCommerce Fraud Professional
Chargebacks involve quite a few stringent processes and complex procedures. Making sure you provide adequate information when challenging a chargeback dispute is key. One thing that you can do is provide compelling evidence in those cases where the cardholder has claimed Fraud – Card not present (10.4) or Merchandise/Services Not Received (13.1).
Compelling evidence documentation can be used to provide support for various card not present transactions including charges for airlines, digital goods, and recurring billing services. Some forms of documentation that would be accepted as Compelling Evidence are: Purchase details and description of services, Renewal and cancellation terms accepted by the cardholder and proof of a previous transaction that was not disputed.
Because eCommerce fraud is already painful with the reversal of funds, chargeback fees and lost product, the indirect costs are often ignored or are just an afterthought. Recent studies show the lasting impact payment fraud has on consumers, merchants and issuers, indicating that the cost of fraud continues beyond the initial loss. Increasing fraud has also influenced organizations’ budgets, with chargeback and risk management costs representing as much as twenty percent of a merchant’s operational expenditure, according to Javelin Strategy and Research.
Polling consumers in early 2016, a recent study found that consumers have lasting reactions after experiencing fraudulent charges on their credit or debit cards that can impact either or both the card issuing bank and merchant involved.
A new study from Vesta and Javelin finds similarities and differences between merchants selling digital goods, physical goods or both when it comes to expectations for how fraud trends may change following the roll-out of EMV. More than half of all merchants worried about growing fraud cite EMV as a cause for this concern, but digital goods merchants are more likely to increase fraud and chargeback management spending over the next year relative to their counterparts.
Concerns around increasing fraud, and therefore risk and chargeback management spending, in a post-EMV world are certainly warranted. According to projections from Javelin, card fraud losses at the point-of-sale are expected to steadily decline from $6 billion in 2014 to $5 billion in 2018. Card Not Present channel fraud, however, is expected to nearly double from $10 billion to $19 billion over that same time frame.
Continuing to build on the more than 35 online training courses offered today, The Fraud Practice has released a new training course titled Successful Strategies for Chargeback Representment, now open for enrollment in our online training portal. Covering 60 different chargeback reason codes in about two hours of instruction time, this course explains the procedures and steps to follow from when a chargeback was received until it is reversed, including specific strategies for winning more disputes based on the chargeback reason.
Accompanying the latest addition to our online training catalog, The Fraud Practice is also launching the eCommerce Chargeback Professional certification, which marks the 10th CNP payment and risk certification track offered by The Fraud Practice. This new certification program expands on the existing eCommerce Chargeback Specialist certification, while those who have already earned this certification will be able to move up to the eCommerce Chargeback Professional for 50 percent off the already reduced certification upgrade cost.
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