How can I establish communication and collaboration with issuing banks to prevent chargebacks and friendly fraud?
Merchant-issuer collaboration is essential for effectively preventing true and friendly fraud chargebacks. Despite this, there is an overwhelming lack of communication between these parties, both of which could greatly benefit from order information sharing. As the CNP landscape becomes more complex and fraud inundates the channel at alarming rates, leveraging collaboration and information sharing is the one thing that can keep merchants and issuers one step ahead of fraud.
Here is what the experts are saying:
- Collaboration is important now more than ever. EMV has put CNP merchants in a vulnerable position as fraud migrates to online channels. Friendly fraud is also on the rise, prompting e-commerce merchants to understand how digital shoplifting can impact their bottom line. By combining and layering fraud prevention tools, merchants can combat evolving fraudsters while also keeping friendly fraud at bay. However, the most effective approach includes merchant/issuer collaboration to fight fraud and chargebacks and save both sides millions of dollars in unnecessary chargeback costs, operational expenses and lost customers due to poor service experiences.
- Collaboration means stopping fraud faster. Issuers know when fraud happens right away but the power to stop fraud lies in the hands of the merchant (when armed with the right data). In some cases, however, merchants actually uncover fraud first, though they face their own bias in thinking legitimate transactions are fraudulent. This can negatively impact profits and customer experience. By working together and sharing insights, merchants and issuers can stop fraud faster without hindering legitimate sales or harming customer service.
- Don’t fall into the TC40 trap. Merchants should take heed when using TC40 files as a chargeback prevention tool. While both chargebacks and TC-40s track fraud, they are different in many ways. TC-40s are issued within days of a cardholder report of fraud whereas a merchant may not be notified of a chargeback disputes for up to three months after it is initiated. TC40 data also doesn’t include other non-fraud disputes that could result in chargebacks aka friendly fraud. Relying solely on TC40 data rather than working directly with issuers in real-time can cause a negative impact to the bottom line.
- Collaboration puts a target on Friendly Fraud’s back. Merchant-issuer collaboration, ideally through a real-time platform, can help all parties identify and Reduce Fraud and “friendly fraud” chargebacks. By sharing purchase details between merchants and issuers, the issuer can also share this information with the cardholder upon inquiry to legitimize and reconfirm the sale. This helps reduce instances of fraud and chargebacks where the cardholder does not recognize the charge or is seeking to fraudulently avoid paying for the item or service.
Collaboration is more important now than ever. The desire for faster payments has proliferated faster – and easier fraud. When merchants and issuers work together through data and insight sharing, cardholder confusion is eliminated and friendly fraud is stopped in its tracks. The CNP landscape forecast continues to be rocky, but utilizing a collaboration platform can help merchants gain solid footing to fight fraud and boost profits.
Verifi’s end-to-end payments protection suite tightly couples our Global “Super Gateway,” Intelligence® Suite and Cardholder Dispute Resolution Network™ (CDRN) and Chargeback Representment (CBR) services so you can protect your revenue streams and process payments more securely and seamlessly. Gateway’s Intelligence® Suite provides a comprehensive fraud management platform that enables you to cost-effectively layer, test and adapt best-of-breed tools as the marketplace – and fraudsters – evolve.
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Contact us to find out how to guard against online payments fraud and expensive chargebacks. Have your own thoughts on what you read? Ping us on twitter (@verifi) with #paymentstips and let us know what you think.