The Immortal Bard wrote, “A rose by any other name would smell as sweet”. In other words, no matter what a thing is called, it’s properties are what we identify. The same could be said for Credit Card Fraud. To some a chargeback, to others friendly fraud, or even plain old e-commerce fraud. Whatever term you use, credit card fraud and chargebacks are complicated and costly for merchants and issuers, eating into time, money, and resources. In short, there is more sour than sweet.
The impact of credit card fraud on your business’ bottom line should not be underestimated. In the UK alone, Financial Fraud Action UK reported that losses due to payment card fraud totalled £618m in 2016, with banks and card companies preventing a total of £982.4m, equivalent to £6.10 in every £10 of fraud being stopped.
One of the biggest reasons merchants experience chargebacks is because their customers simply don’t recognise the charge, but the good news is it doesn’t have to be this way. Although some chargebacks are unavoidable, that is not the case for all chargebacks.
So, how can chargebacks be avoided? It starts with your payment processing rules. Merchants should make sure they have the correct transaction records to be able to defend themselves against a consumer or fraudster trying to cheat the system.
Avoiding chargebacks differs by payment type, although a few areas hold true. Follow the tips below and you will be in with a fighting chance of preventing credit card fraud—and, if that should arise, protecting your business.
Avoid Chargebacks and Credit Card Fraud:
- Confirm order details with the customer – You can never have enough information for a transaction. Ask the customer to repeat their number if by phone, check their information if online, and provide ample opportunity to review this information. Have as much data as possible on the customer before the purchase is finalised
- Authorise all transactions – Use Internet Authentication provided by Visa, MasterCard and Maestro Cards to validate the cardholder’s identity and ensure it matches the information you have on the customer. Record card details: card number, expiry date, 3-digit CVV code, name, address.
- Own the delivery process – Make sure that you have a reliable delivery option, and if possible look to use one that offers signature upon delivery as an option. Ensuring the product gets to your customer is key. Also, ensure your delivery system does not rely on third-party service to bring the item to the cardholder.
- Flag issues – Have a system in place that can flag card issues (expiry dates, invalid, over limit, etc.) at every stage of the process.
- Monitor patterns and activity – Monitoring buying patterns of customers allows you to be aware of and flag any suspicious purchases or purchase patterns. For any customers that cancel the original transaction and then reorder the goods, push them back through the system to process a new transaction.
- Checks and balances – Have a checks-and-balances system for international orders: ensure you are aware of the various regulations by country.
Unlike the quotable Shakespeare, we don’t profess to have all the answers to life’s big questions. We do, however, have a lot of the answers to your credit card fraud and chargeback problems. Contact us to learn more about our solutions.