As new cutting-edge fintech services and new payments technologies arrive weekly, you’d think that chargebacks would be decreasing, right? And you’d be wrong. JP Morgan Chase estimates chargebacks are growing annually by 20% while online sales grow at only 7%. We’ve got a collection of news stories and insight into chargebacks trends from around the globe.
Chargebacks911 and ACI Worldwide are combining to try to reduce the $99 billion fraud and global chargebacks problems for business. PYMNTS interviewed Alex Cagnoni, CEO of Datablink about new fraud trends and chargebacks challenges ahead for business.
Aite Group predicts card-not-present (CNP) fraud in the US will reach $7.2 billion by 2020 and says business needs to adopt more effective defense systems and strategies. Merchant Link reports 82% of it’s US customers now have EMV-compliant terminals. Business2Community published a simple primer with everything business needs to know about chargebacks including friendly fraud.
Research from Federal Reserve Bank of Kansas City found 80-90% of successful chargebacks from 2013 to 2014 were resolved as a “merchant liability.” The introduction of EMV cards led to a large increase in chargebacks because they are automatically charged to merchants without EMV systems. Consumers are also more knowledgeable about making chargeback claims.
WorldVillage offered a set of proactive ways for business to reduce chargebacks using a combination of policies, proactive monitoring and systems. 2017 looks like it will be a challenging year for chargebacks.
Chargebacks911 and ACI Worldwide Combat £80 Billion ($99.8 Billion) in Global Chargebacks
According to JP Morgan Chase, the frequency of chargeback instances is growing at an alarming rate of 20 percent annually, compared to transaction growth of just 7 percent in the same time period.
According to industry research, fraud causes £80 billion in losses annually–and chargebacks account for most of that. This is a pivotal moment for merchants that have been searching for a truly effective chargeback management solution. Via paymentweek.com
Hacker Tracker: Shimmers, Identify Fraud, Hacked Hotels
Just when payment card data seemed somewhat protected by EMV technology, hackers have found yet another way to steal information and gain access to PINs. In this week’s Hacker Tracker, PYMNTS was joined by Alex Cagnoni, CEO of Datablink, who shared some interesting insights on some of the latest news across the cybersecurity landscape.
Old Tools, New Tricks
Despite the growing usage of EMV chip card technology to help safeguard payment card data at the point of sale (POS), cybercriminals are turning to devices called “shimmers” to read card numbers and possibly access a card’s chip and obtain the PIN.
As Datablink CEO Alex Cagnoni pointed out, card cloning devices are not something new; however, with the use of a chip, the attack has become more complex but still quite effective. Via pymnts.com
How to Reduce Chargebacks Without Killing Online Sales
Card-not-present (CNP) merchants are a lot like tight-rope walkers. Between the influx of fraud (both counterfeit fraud and “friendly fraud” chargebacks), most merchants have a hard time finding a balance in fraud prevention that allows them to effectively combat bad actors without turning away good sales. As online fraud continues to rise (Aite Group predicts CNP fraud in the U.S. will reach $7.2 billion by 2020), the tightrope is getting, well, looser.
When merchants experience an increase in fraud and chargebacks, the knee-jerk reaction is to tighten internal fraud controls and add additional layers of fraud tools from third-party vendors. Unfortunately, this leads to overly strict fraud filters, redundancies in fraud tools, and ultimately an increase in cost per transaction and a decrease in sales. Via forbes.com
Merchant Link: Linking the Merchant to EMV
EMV is nowhere near finished, a year and a half after the much-heralded liability shift in the U.S. And for one firm, cloud gateway and data security provider Merchant Link, the process proceeds apace for hospitality and dining firms looking for certification, according to CIO Scott Carcillo. In an interview with Karen Webster, the latest installment of Data Drivers focused on the continued shift.
Chargebacks: Everything You Ever Wanted to Know
Every chargeback is accompanied by a reason code. There are over 151 different reason codes among the four card brands. The reason codes correspond to different causes, below are some frequent ones:
- Delivery failure: The customer did not receive the product.
- Dissatisfaction: Complaints that the item was drastically different than advertised or defective.
- Credit not processed: The customer doesn’t get their money back after they’ve returned a product.
- Technical problems: Glitches during the payment process (double charges or wrong amount charged).
- Fraudulent transactions: Fraud occurs when the credit card or card information is used without the cardholder’s authorization or knowledge (via stolen credit card, data breaches, card skimming, identity theft, etc.).
Consumers have a powerful tool in credit card chargebacks
A January 2016 study by researchers at the Federal Reserve Bank of Kansas City found that the overwhelming majority of successful chargebacks — 80 to 90 percent — from 2013 to 2014 were resolved as a “merchant liability.”
Merchants would prefer consumers dispute charges as a last resort, as the law intended. But because the process has become so easy, retailers say some customers use a chargeback instead of returning an unwanted item for a refund or getting in touch to work out a solution. Consumers might even dispute charges in an attempt to get their money back and keep the merchandise, a behavior sometimes dubbed “friendly fraud.”
Retailers report a surge in chargebacks following a behind-the-scenes change related to the new security chips in credit cards. On Oct. 1, 2015, liability for in-person fraudulent purchases switched from banks to retailers if the disputed charge came from a credit card equipped with an anti-fraud microchip, but the retailer’s card reader didn’t accept chip cards.
Some retailers who usually saw a few hundred dollars’ worth of chargebacks per year were suddenly seeing thousands’ worth, Shearman said. Much of that was due to fraud, but consumer disputes were also being automatically charged to retailers who didn’t yet have chip-card readers, he adds. Via denverpost.com
PayPal Gives SMBs A Big Leg-Up
Sometimes, the best way to solve a problem is to go straight to the source to fix it.
That was PayPal’s approach as it readied its release of a range of new capabilities and features to help small business owners do what they do best — run their businesses.
By leveraging the communication channels established with its nearly 15 million merchants, PayPal relied on their feedback and comments to build out the services and tweak the products that merchants said they needed most. Via pymnts.com
Dealing with Online Payment Challenges as a Business Owner
Despite the excitement and ongoing advancement in technology with mobile payments, wallets, international payment options and tighter security, there are still unique payment challenges with online payment platforms that will continue to impact businesses of all sizes around the world.
I’ve been in the payments world for years and seen most of the challenges the face both the business owner and a payments provider. There are many unique challenges that face the payments space that is making it harder and harder to accept payments without having fraudulent transactions.
Here are some of the ongoing — online-specific — payment challenges that come with offering online payments and a few tips to combat. Via worldvillage.com
Got payments industry stories?
If you enjoyed this post on chargebacks, we also cover a range of payments industry, fintech, mobile payments, research and other news you can use. Subscribe at the top of the page to get free news briefs every Monday-Wednesday-Friday.
After just one month, our PaymentsNEXT subscriber list is growing and we’re always glad to get reader feedback and story tips to help deliver the best business intelligence for payments industry leaders. Simply email our editor – jeff (AT) paymentsnext.com with your suggestions.
LET’S CONNECT