Page 16 | Verifi

When credit cards were introduced, consumers, banks, and merchants were concerned about data security and theft. When online banking was introduced, many people were slow to adopt due to concerns for the security of their banking information and the risk of fraud. PayPal introduced a new type of online payment that was used initially by outliers and other early adopters, again with many consumers concerned about the safety of their money.
Now, buying online or in other card-not-present (CNP) scenarios is ubiquitous, and most consumers, banks, and merchants give little thought to the issues of secure data and credit card fraud. This can be seen as both good and bad. Good because implicit confidence makes it easier for merchants to market and sell online, building strong relationships with customers. It’s bad because it instills a false confidence, leading consumers to assume they are 100% protected from fraud. Complacent customers become very alarmed when their data is violated.
When a security breach occurs, typically the negative media coverage and resulting social media outrage focuses on you, the merchant, and the risks of doing business. This can mean the end of your business, and that’s exactly why you need to take measures to make sure consumer data is secure and that you have proven fraud reduction measures in place.
Reducing Your Fraud Risk
The harsh reality is that it’s up to you to mitigate and reduce credit card fraud risks. Your customers and their issuing banks need to know that you’re up to date with the latest in data security technology.
At a minimum, make sure you have the following data security measures in place:

EMV support EMV, or chip card, is now the international standard for credit and debit card security. The technology embedded in the microchips on these cards was developed to protect everyone involved in the transaction. Unfortunately, with EMV we are seeing a sharp increase in omnichannel fraud, meaning you need a layered approach that includes the use of cybersource tokenization.

PCI compliance PCI compliance is designed to protect consumer cardholder data during the entire e-commerce transaction. It’s imperative that you adhere to these regulations and standards; however, remember that PCI compliance is not the complete solution. You still need a solution that provides encryption, merchant partner data protection, and limited access to cardholder data. Using a solution such as our Global Payment Gateway provides you everything you need to be PCI compliant, while keeping your overall costs down.

Password security While customers are typically resistant to creating long alphanumeric passwords, it’s important that your payment solution requires customers to employ a password that meets basic—if not advanced—security encryption standards. In fact, many payment solutions are going beyond a standard password and use multi-factor authentication to increase data security and reduce fraud.

SSL protocol Your online payment system must use SSL (Secure Socket Layer) to provide an additional level of data security. Many customers are familiar with SSL and will expect to use only an encrypted HTTPS website or mobile interface. It’s a good idea to include some information on your website about your use of SSL and how this enhances consumer security and fraud protection.

Secure customer data Ensure your customer service team is up-to-date with and following best practices to protect customer data. Instruct them to never give out credit card information, addresses, phone numbers, or passwords. Customers are expected to provide their credit card information and to confirm their identity with security questions and address verification.

We cannot stress enough that you are responsible for the security of customer data. As we’ve learned from recent major online security breaches, consumers are not interested in the underlying causes for the breach: they are focused on the risk of conducting further business with any merchant whose security has been breached.
Data Security Is a Must
Good customer service, brand loyalty, a vibrant social media presence, business continuity measures, data security standards compliance, and a proven payment solution all work together to protect you, your customers, your investors, and third-party partners.
While risk is part of running a business, knowing that you’re following the recommend business practices to protect your company and customers from credit card fraud allows you to confidently reduce the risk level. Gone are the days of consumer concerns for using credit cards, Internet banking, PayPal, and other CNP transactions. Unfortunately, this new “confidence” level brings with it complacency and many potential new avenues for fraudsters and hackers.
Don’t let the complacency that many consumers have with the new ways of buying and selling trickle into your business practices. At the end of the day, it’s your company’s reputation that can and will be impacted. Your customers want to buy your products and services wherever they are and however they can. Make sure you’re providing them a secure platform that is a proven payment processing solution that protects everyone involved.

There is nothing simple about chargeback reason codes. Each credit card company has their own list of chargeback reason codes, and along with these different lists come different time limits, definitions, and expected merchant actions. To complicate matters, the major credit card companies (Visa, MasterCard, Discover, and American Express) don’t even use the same number-coding system to describe the reason codes.
So, yes, it’s understandable that you’d be confused. To be honest, it can be a challenge for many in the payments industry to fully understand the ins-and-outs of chargeback reason codes. The best way to really understand this key aspect of the chargeback process is to stick to the basics and the must-know information. You can spend days reading about chargeback reason codes, but this may only make you more confused. We’re going to explain what you really need to know and provide you with some links for further reading and details on reason codes.
Understanding Chargeback Reason Codes
The chargeback reason code should clearly explain why the chargeback has been filed. From reading the chargeback reason code description, you should be able to understand the issue or problem the customer had and why the transaction is being disputed.
Each reason code is composed of a two-, four-, or three-digit number and a short phrase that describes the chargeback (these elements will vary, depending on the credit card company). For example, here are reason codes from each major credit card company:

Visa: Reason Code 30 Services not provided or merchandise not received.
MasterCard: Reason Code 4859 Services not rendered.
Discover: Reason Code 4755 Non-receipts of goods or services.
American Express: Reason Code C08 Goods or services not received or partially received.

In this example, we have four distinct reason codes for the same scenario: the customer didn’t receive the purchased items or services. This example highlights why it’s important for you to be familiar with chargeback reason codes, but also why you can’t expect yourself or your team to know every facet of reason codes. There simply is too much information to manage, particularly for your team who may not be chargeback specialists. That is why solutions such as Order Insight™ are so popular; they take the guesswork and confusion out of the entire chargeback process and take the pressure of understanding chargeback reason codes off your shoulders.
However, we do recommend that you have the chargeback reason code documentation easily accessible so that if you are dealing with a chargeback and aren’t using a solution, such as Order Insight or Intelligence Suite, you can quickly find the code, understand what it means, find out the time limit for the chargeback, and learn what evidence you must provide to dispute the chargeback. To help you out, here is the documentation you need:

Visa
MasterCard
Discover – not available online, use the resources on Discover Global Network.
American Express

You’ll notice when reviewing these PDFs that each credit card company doesn’t have the same number of reason codes. This difference in the number of reason codes is so because each group’s issues differ, or they may not have a reason code for a particular scenario.
Chargeback Reason Code Categories
While there are 151 distinct reason codes among the four major credit card companies, these reason codes can be generally grouped into five main categories. No one will expect you to know all 151 reason codes, but it does help to understand the five different categories.
Familiarity with these reason code categories will help you to determine how you can improve your sales process, authorization systems, and customer interaction, thereby reducing the number of chargebacks you receive.

Fraud or No Authorization This category applies when real fraud has occurred and the customer’s card has been violated, or when the customer does not remember authorizing the transaction and doesn’t believe their card was compromised. For example, the customer doesn’t recognize the transaction, or the cardholder was charged multiple times for the transaction.
Cancel Recurring Billing This happens with subscription services, such as newspapers or magazines, and the customer is disputing a renewal. For example, a customer cancelled the subscription but was still charged, or the customer didn’t know they were agreeing to a recurring charge.
Products or Services This category applies to claims related to the quality of the merchandise or service. For example, the customer claims the product doesn’t match the description, or the product arrived damaged.
Liability Shift This category handles any claims that involve non-chip credit cards.
Other This broad category represents disputes that don’t fall into the above categories. For example, there isn’t an existing reason code for the cardholder’s dispute, or the cardholder is disputing the exchange rate for an international transaction.

You’ll notice from these reason code categories that there are steps you can take to mitigate the number of chargebacks you receive. Examples include: always make sure your refund/return policy is clearly stated on your website; make sure your customer service team keeps detailed records of every communication with a customer; always keep proof of authorization and transaction receipts; and make sure you are complying with the latest industry rules and regulations.
And, yes, chargeback reason codes are still complicated. We hope we’ve shed some light on this complicated area and that you have a better understanding of these codes and what they mean for your business practices. As always, the Verifi team of experts is available to answer questions and to help you protect your business from unnecessary lost revenue.

As a merchant, you’re bound by a long range of rules and regulations that enable you to accept and process credit and debit card payments. The credit card companies you work with have very detailed and established rules and processes that you must be familiar with. In this article, we dig into Visa’s chargeback rules and highlight some of the key areas that you should be aware of.
The Visa Chargeback
Each credit card company and bank has its own definition for a chargeback, slightly different from others. Visa clearly states early in its guide, titled Chargeback Management Guidelines for Visa Merchants, that a chargeback “provides an issuer with a way to return a disputed transaction.”
As you know, there are many reasons for a chargeback, and Visa highlights three key reasons for chargebacks:

Merchant did not get authorization for the transaction

Merchant did not collect a card imprint for electronic or manual sales

Merchant accepted an expired credit card

As part of being a Visa merchant, it would be helpful for you to have a quick refresher on the Visa chargeback dispute process. We recommend that you review this process in detail in your Visa documentation, and if you have any questions, do contact Visa.
1. The customer contacts their card issuer to dispute the transaction.
2. The issuer asks the customer to provide details on the transaction, and this data is sent to the acquirer using VisaNet.
3. The acquirer next can decide to resolve the chargeback or to forward the information to you, the merchant.
4. If you are notified of the chargeback, you can choose to accept or dispute the chargeback. If you decide to dispute the chargeback, you must provide details to the acquirer to defend the transaction.
5. The acquirer reviews your information and decides how to proceed. Depending on the decisions made by you and your acquirer, the chargeback may be represented or closed.
Refunds, Returns, and Cancellations
As a merchant, you know that you must have clearly defined refund, return, and cancellation rules available to your customers. Typically, customers will dispute a transaction due to confusion over your refund, return, and cancellation rules––this can be both an honest misunderstanding or an instance of chargeback fraud. To protect and defend yourself in these chargeback claims, you need to be able to clearly demonstrate that your policies are easily accessible to all customers, for both card-not-present and card-present transactions.
To reiterate the importance of making these policies available throughout the transaction, Visa states in its merchant guide: “Visa will support your policies, provided they are clearly disclosed to cardholders.”
For card-present merchants, Visa supports the communication of your policies when you do the following:

Clearly detailed policy The policy is clearly printed on the front of the credit card transaction receipt close to the signature field or is in an obvious location on the receipt.

Signature or initials When displayed on the back of the receipt or on another document, there must be space for the cardholder’s signature or initials.

For card-not-present merchants, Visa expects you to do the following to clearly communicate your return, refund, and cancellation policies:

Communicate clearly For phone orders, you must email, mail, or text the policy to the cardholder and receive proof of acknowledgement of this information.

Clearly documented during the transaction For Internet sales, your policies must be displayed during the final stages of the online transaction or on the checkout screen. In both instances, there must be a way to validate that the customer has read or reviewed your policies, either with an accept or submit button.

Transaction Receipt Best Practices
During the chargeback process, your acquirer will likely expect you to provide a copy of the Visa transaction receipt. This receipt with the information disclosed on it is reviewed by your acquirer when determining to accept the chargeback or to represent. As part of its chargeback rules, Visa has detailed, annotated images in Chargeback Management Guidelines for Visa Merchants of the Visa requirements for transaction receipts. We recommend you review these images and compare your transaction receipts to them.
Whenever there is any doubt or question over the validity of the cardholder’s chargeback claim, your acquirer will want a copy of the transaction receipt. Visa recommends that you do the following to minimize copy requests:

Customer can recognize your name Make sure your customers can clearly recognize your company name on their Visa statement.

Informed sales staff Ensure your sales personnel understand and follow the Visa best practices for transactions. This includes providing the cardholder a copy of their signed receipt.

Avoid illegible receipts Your transaction receipts must be easy to read and clearly printed. Make sure your point-of-sale hardware is up to date and well maintained.

Copy request ratio Visa recommends that you track the number of transaction receipt requests you receive. If this ratio to your sales reaches 0.5 per cent, Visa wants you to review and improve your procedures.

Working with Visa
There is much more to working with Visa and complying with Visa chargeback rules than what can be covered in just one article. We recommend that you read the merchant guide and stay up to date with any notices you receive from Visa.
The Chargeback Management Guidelines for Visa Merchants is a very detailed guide, and we want to make sure you pay close attention to the following areas:

Monitoring This section details Visa’s three chargeback monitoring programs.

Reason Codes This section details every aspect of the Visa chargeback reason codes. (Note, every credit card company has its own list of chargeback reason codes.)
Compelling Evidence This section details the evidence requirements and your rights as a merchant.

Ultimately, we want you to know that working with Visa is not an onerous relationship. The more you know, the easier it will be and the more likely you’ll be to reduce your Visa chargebacks. To learn more about working with Visa, read and review the content in our Knowledge Base.

Back in your college days, the excitement over running your own business was intoxicating––you have a chance to do make a difference and see your idea in action. You learned that if you come up with an idea, create a business plan, get some cash together, set some milestone dates—then you can get working and get your business up and running. In reality, most of what you learned in college doesn’t reconcile with the hard facts of the business world, and it certainly skipped a few vital details about running and maintaining a successful business.
For example, what are chargebacks? Did your business instructor break the bad news to you about this in college? Most likely, you first learned about it when you received a chargeback notification from one of your customer’s issuing banks. It may not be a pleasant welcome to the world of business, but it is the reality. Without any foreknowledge of this common business pitfall, it’s no wonder why so many merchants end up in the eleventh hour scrambling and responding ineffectively to chargebacks.
What Are Chargebacks?
Maybe you’ve received notification from an issuer about a chargeback, or you’ve been browsing our website and realized that you have a lot of questions about chargebacks. Not to worry, we’re here to help you out.
Chargebacks were set up by the U.S. Fair Billing Credit Act of 1974 to protect consumers from credit card fraud. The thinking was that this would give customers peace of mind when using their credit cards, instilling confidence that if their card were stolen or defrauded then they would not be held accountable for subsequent charges.
You receive notification of a chargeback after your customer contacts their credit card company to dispute a charge. The credit card company responds by reversing the charge and returning the funds you received for the payment to the customer. You are now on the losing end.
The pressure is now on you to prove that the charge on the customer’s card is in fact valid, and that the customer approved the charge. To do this properly, you need to provide solid proof that the customer initiated and authorized the charge.
Responding to Chargebacks
Stated bluntly, responding to chargebacks is not easy. When done incorrectly, this process can be expensive, exhausting of resources, and ineffective. (Something you didn’t learn in Business 101…)
To respond to chargebacks effectively, you need to understand the reasons why a customer may file a chargeback:

Confusion over the charge on the credit card statement. This is incredibly common and can be prevented by providing detailed billing descriptors about the substance of the transaction. For example, provide information about how and when the item was ordered, or even a more detailed description of the item, such as size or color.

Fraudulent charge due to credit card theft. The customer’s card was stolen and violated. Typically, the credit card company will identify this before the customer even finds out about the charge. This is the prime reason why chargebacks were first introduced.

The item was not received. Now with online and mobile sales, often items are simply dropped off at the customer’s address without a signature of receipt. This can result in the item being stolen or even left at the wrong address. It is best if you ensure that your delivery service requires a signature upon receipt of the item, as well as making sure that your authorization system prompts the customer to double-check and approve their delivery address.

The customer was charged multiple times for the order. This can simply be chalked up to human error. Often the charge wasn’t processed correctly the first time so it was run again, and then due to a communication error the customer was charged twice for the item.

A subscription was canceled but the charge continued. This can happen when the customer is not fully aware of the subscription cancellation policy and believes they have followed the guidelines, when in fact they haven’t. To prevent this from happening, make sure you have clearly documented your subscription cancellation policy as well as your refund/return policy on your website.

“Friendly” fraud or chargeback fraud. The customer is willingly stealing from you. Unfortunately, this is a very common reason for chargebacks. People are looking for ways to cheat the system, and one way they will do this is by knowingly committing chargeback fraud. This is such a prevalent problem for merchants and issuers that we urge you to learn more about “friendly” fraud.

There is one common thread that connects these chargeback reasons: knowledge. When you have the information that you need to determine the chargeback validity, you can then decide how to respond. Often the best response is to contact the customer directly, but to do this you need a solution in place such as CDRN, which allows you to quickly and easily contact your customer. If you do determine that the chargeback is valid, then you can take measures to ensure that it doesn’t happen again. This can be readily handled by setting up a solution to help you stop chargebacks before they happen.
We know you’re doing your best to run your business. We know that it can be challenging to deal with the unexpected. We don’t want chargebacks to be unexpected. The best thing you can do (and what they probably didn’t tell you in Business 101) is to take steps today to prevent chargebacks from happening tomorrow. Get the knowledge you need so you’re not left scrambling and stressing over chargebacks.

You’ve been alerted to a customer chargeback, and you know that this is a fraudulent claim. So, what do you do? You can do nothing and silently stew and simmer with anger and frustration. Or you can take action and decide to represent the credit card dispute.
Fighting chargebacks and disputing these fraudulent claims is your right as a merchant. You have the right to represent yourself and prove that the customer is making a fraudulent claim and abusing the chargeback process. The problem is that so many merchants wrongly believe that this is a wasted effort that is guaranteed not to succeed.
Well, here’s the honest truth: you need to know that you can dispute these chargebacks. This is the only way your voice can be heard, by speaking up and fighting for your rights when you’ve been wrongly charged and are now a victim of chargebacks. Just as chargebacks were created to protect customers, you need to use the chargeback dispute process to protect yourself.
Now is the time take action. But first, you need to be fully prepared and ready to win the dispute. This means you need to know what to do, what not to do, and how to judge when you should actually walk away from the representment process.
Ready, Set, Take Action
As part of your initial preparation to respond to the chargeback, it’s important to know how not to get caught up in the common mistakes that many merchants make during chargeback representment. These are some common mistakes you should learn to avoid:

Assuming that issuers don’t want you to represent: In fact, the opposite is true. From an issuer’s perspective, they want people to know that credit cards are secure. Public perception is that credit card theft and fraud is running rampant, hence the frequent default position behind why so many people file fraudulent chargeback claims. If you stand up and fight these invalid credit card disputes and charges, you’re helping to show that credit cards are secure and safe. To do this effectively, you need to legitimately know which claims are valid and which are not. This is not something you can guess at, rather you need a solution such as our Intelligence Suite , which allows you to get the best balance of fraud protection for your business.

Ignoring the chargeback reason codes: These reason codes are key in effectively winning a dispute. The reason code determines the information you need to provide when filing a representment. Are you up-to-date on the latest reason codes from each issuer (yes, each issuer has their own reason codes)? Do you know the evidence requirements for each code? Do you know all the rules and regulations surrounding the representment process? Not knowing these details can and will hurt your ability to win a dispute.

Giving up too early: This dispute process is not simple, and we don’t want you to give up when you begin to feel overwhelmed. There are resource, money, and time requirements, but these should not be a barrier. The long-term rewards are worth this preemptive effort and investment. You’ll reduce the chance of a customer making a second fraudulent chargeback claim, you’ll encourage issuers to be more diligent about analyzing customer claims, and you’ll inevitably reduce the instances of chargeback claims.

Neglecting your customer service team: Your customer service team is critical in preventing chargeback claims. When customers know that they can quickly and effectively resolve their concerns with your customer service team, they’re less likely to become frustrated and file a credit card dispute, now and in the future. Equally, you need to make sure that your customer service team is keeping thorough records of every customer interaction. This includes keeping emails, recording or documenting conversations, and ensuring they have evidence of the efforts made to resolve the customer concerns. When you have easy access to this information, you can make a strong representment case.

Trying to do it alone: Chargebacks are complicated, winning a dispute is complicated, and this is why you can’t always do this alone. Too many merchants get motivated to take action, but they often overlook that they lack the expertise needed to successfully represent a chargeback. Working with a representment partner allows you to focus on your business, so you can be at ease with the knowledge that the real chargeback experts are working for you to win the credit card dispute. This all adds up to less time spent, money saved, less stress, improved customer confidence, and higher win and success rates.

Ready to Represent
We frequently work with merchants who have unknowingly made these mistakes and are left wondering why they didn’t win their dispute.
We urge you not to succumb to making these common mistakes and accepting a mere “Honorable Mention” in your business achievement. We want you to be motivated to represent and win the business “Blue Ribbon.” And we want you to do it when you’re ready. We understand these challenges, and this is why we’re here to help you. We urge you to learn more about the common mistakes that merchants make during the dispute process, and know that we are on your side. The more merchants like you who take action and successfully win credit card disputes, the better it is for everyone involved––customers, business owners, issuers, investors, and everyone who plays a part in the whole payments ecosystem.

The topic of chargebacks is a hot one. A topic so hot that just talking openly about chargebacks can get people stressed out and, frankly, a little bit angry. We understand this emotion. Chargebacks are costing you money, time, resources, and loading a lot of stress onto you. The good news is that you don’t need to feel stressed out or angry about return item chargebacks.
Nope, not one bit of anger, stress, or headache need be yours when it comes to return item chargebacks. No, we’re not be facetious or sarcastic. We’re actually sharing with you some great news: Return item chargebacks are not your problem and they’re not our problem.
So, why write about this type of chargeback if these are not going to impact your bottom line or cause a drain on your resources? Well, because we truly believe (and we’ve said it before) that knowledge is power. The more you know about what your customers and issuers are dealing with, the better you are able to make smart business decisions.
What Exactly is a Return Item Chargeback?
A return item chargeback occurs between a customer and their issuer or bank. A customer receives notification of a return item chargeback when there are insufficient funds in their account to cover the cost of a check or withdrawal. This results in a fee being charged and automatically withdrawn from the customer’s account.
Each bank or issuer has different language for this charge. For example, here’s the terminology that some of the major banks in the United States use when identifying this charge:

Bank of America: Deposited Item Returned with $12 charged to the customer
Wells Fargo: Cashed/Deposited Item Return Unpaid with $12 charged to the customer
S. Bancorp: Return Deposited Item or Cashed Check with $19 charged to the customer
HSBC: Chargeback with $10 charged to the customer
Capital One: Rejected Check with $9 charged to the customer
TD Bank: Cashed or Deposited Item Returned with $15 charged to the customer

As you can see, there is very little common language used, and from the customer’s perspective the message really isn’t clear. Using the word chargeback also complicates things for everyone involved (we can only imagine the customer service calls…).
Why Do These Charges Matter to You?
The more you know, the better you can communicate and work with everyone you rely on to build and maintain a successful business. This includes understanding return item chargebacks and how they impact your customers and issuers.
These charges are simply one more thing that the people you’re doing business with are having to manage and understand. No, there is nothing you can do about these chargebacks. However, you can review the language the banks are using and then think about how you’re communicating with your customers.
For example, think about your billing descriptors on customer credit card statements. How clear and obvious are these descriptors? Is it obvious to the customer what the charge is for? Are you using your commonly known business name, or are using the name of your holding company? Have you thought about including descriptors that include details on the item purchased, where it was purchased, and how it was purchased?
This doesn’t sound like much, but remember the confusing messages customers are receiving from their banks. Now, think about how and why a customer might feel compelled to contact their credit card company when they see a charge on their statement that they don’t recognize. It kind of makes sense, now doesn’t it?
Customers are confused. They don’t always understand the charges are on their credit card statement. They’ve been charged a fee by their bank for something they don’t understand. This confusion adds up and comes back to you in the form of a chargeback.
That’s why it’s important that you take all the steps you can to make it easy and straight-forward for your customers to interact with you. This stems from the initial research on your website about the item they want to purchase, to reviewing the refunds and return policy, to experiencing a simple authorization and authentication system, and to finally receiving the item on time.
To help ease this confusion and to make doing business easier with you, we want you to think about using a system such as CDRN that allows you to communicate directly with your customers. Remember, your customers might not have a great relationship with their issuer or bank, and now they’re trying to work with this institution to manage their chargeback. And your processor/acquirer is dealing with the time, energy, resources and stress associated with chargebacks.
When you’re able to work directly with the customer, you can bring the stress level down, you can get to the root of the problem quickly and efficiently, and chances are very high that in the end the customer will be satisfied and the chargeback will be resolved in your favor.
It’s that kind of knowledge. The more you know, the better you can work with your customers. The more your customers know about the charges on their credit card statement, the less quick-to-react they will be. And your processor or acquirer will be relieved to not have to manage another lengthy and costly chargeback process.

Speak up and let people know what it is that is impacting your ability to be and do your best. A bold statement for sure, but one that many of us would benefit from heeding. To get ahead, you need to take some risks and speak up when you have new ideas or don’t agree with your colleagues. This is particularly important when looking at how you do business. Just because you’ve always done it one way, doesn’t mean it is the best way.
Think, for example, of how you do or don’t communicate with your issuers. If you’re like most merchants, there isn’t a clear line of open communication with your issuers. In fact, you may only communicate when discussing the painful aspects of doing business, specifically when reviewing your chargeback fees.
Reduce and Eliminate Chargeback Fees
Each chargeback you receive comes with an additional cost––the chargeback fee. This fee is levied against you regardless of the outcome of the chargeback process. Win or lose, you’re charged a fee by your issuer. This fee is designed to help cover the costs the issuer incurs when dealing with customer chargebacks.
The more chargebacks you receive, the higher your chargeback fees; and when your chargeback ratio is too high, your ability to do business with issuers becomes prohibitive.
One of the best ways you can protect your business and eliminate the costs of chargeback fees is to speak up and open the lines of communication with your issuer and customers. Typically, the chargeback process follows these lengthy steps:

The customer contacts the issuer to dispute a credit card charge.
The issuer refunds the money and contacts the merchant.
The merchant can choose to dispute or accept the chargeback.
The merchant is charged a chargeback fee by the issuer, regardless of the outcome of the chargeback.

With the standard chargeback process, you are contacted too late in the process. By the time you’ve been contacted and alerted of the chargeback, the issuer has already spent time and money dealing with the customer and the chargeback. This translates into issuing the chargeback fee and other penalties.
Now, imagine if you were alerted to the chargeback at the same time as the issuer. This chargeback process now looks something like this:

The customer contacts the issuer to dispute a credit card charge. The merchant is automatically contacted.
The merchant communicates openly with the customer.
The chargeback is resolved between the customer and merchant.

As you can see, with this updated chargeback process, the issuer is not actively involved. Now, you’re communicating directly with your customers. When you’re able to communicate directly with your customers, it’s much easier for you to solve the problems that customers are facing, ultimately preventing the chargeback from occurring.
The Customer’s Perspective
Fraud aside, customers often contact their issuer because they’re confused about a charge on their credit card. Now, with hacking, credit card theft, and identify theft in the news, customers are on high alert for unauthorized transactions.
By communicating directly with your customers for when they are concerned about a credit card charge, you’re able to assuage their concerns and learn how to better improve your billing. Often, taking the small step of improving the descriptors and details included with the charge can eliminate customer concern and confusion.
This all adds up to reduced chargebacks and ultimately the reduction of chargeback fees. One small change in how you communicate with your customers and issuers can have huge payoffs for everyone involved.
Your customers are happy to have their concerns dealt with quickly and easily. Issuers are relieved to no longer be directly involved in the traditional lengthy and costly chargeback process. You eliminate the time and costs of dealing with chargebacks, keep your customers happy, and eliminate chargebacks and chargeback fees.
All this comes from speaking up and changing the chargeback process. Be actively involved in changing how customers, merchants, and issuers communicate and work together. Remember, the traditional process is not always the best process.

A monthly forum of compiled insight from top leading industry thought leaders to help you protect your payments and boost your profits

Question of the Month

What do merchants need to know to get their share of millennial’s mobile wallets?

Welcome to the August edition of the Verifi newsletter. This month, we’ll look at the millennial consumer and what merchants need to know to get their mobile wallet-share of this very influential buying group.
Millennial consumers control roughly $200 billion of purchasing power, according to a Barkley study. They don’t just control their own wallets; they influence their parents’ and grandparents’ purchasing decisions to the tune of $500 billion.
This generation is bigger than the Baby Boomer generation and not to be ignored. If a merchant is not actively playing by the millennium rules of engagement, they stand to lose out on big profits. Happy reading!

MILLENNIAL CONSUMERS – ARE YOU GETTING YOUR FAIR SHARE?

Millennial consumers want it now and they want it their way. It is all about instant gratification on their terms. They are techno wizards – who consume while they socialize – and collaborate and share while they consume. Merchants who understand this, and intersect seamlessly into the millennial buying process will win. To make sure you are getting your fair share, check out our latest White Paper: The Millennial Consumer: What Every Merchant Should Know About This Influential Buying Generation Download Now

BEACONS, BIOMETRICS AND BIG DATA

Have you harnessed the power of the Internet of Things? We’ve compiled insight from industry leaders on how merchants can best collect, protect and analyze data within the context of IoT. Read More

GET DIGI WITH IT – THE CONVERGENCE OF DIGITAL AND PHYSICAL COMMERCE

The growth of digital commerce is staggering, but its brick-and-mortar counterpart is still vital in the overall commerce mix. Shoppers look up reviews and prices while wandering the aisles of retail stores. Merchants need to understand how to take advantage of this digital-meets-physical convergence of commerce. Read More

MOBILE COMMERCE PREDICTIONS FOR 2016 AND BEYOND

Exactly how big is this mobile commerce thing going to get? Check out mobile commerce growth predictions for 2016 and beyond. Read More

UPCOMING TRADESHOWS

Verifi will be attending the following tradeshows. Will you be attending? Contact info@verifi.com and meet with us.
9/8-9/9: Finnovate Fall 2016
9/12-9/14: Ecommerce Paris
9/13-9/15: ERA
9/26-9/29: MasterCard Europe Risk Conference – Split, Croatia

PARTING WORDS

Payments are moving faster than ever. Millennials continue to shape the payments landscape, causing merchants and banks alike to forge ahead into (often unknown) emerging technologies and digital payments. Additionally, expert outlooks point toward contextual payments, which will feed into the Internet of Things…making it easier than ever for motivated consumers to buy on the spot. While the payments universe seems to be expanding exponentially and at increasing speed, merchants always need to bear in mind that fraudsters are out there lurking, ready to take advantage of these new technologies – and holes in protection – to steal profits. As technologies revolutionizes payments, merchants need to ensure they’re paying as much attention to security and fraud prevention as to the next new shiny technology to ensure that their customers – and their bottom line – is protected.
Ask us how our Cardholder Dispute Resolution Network (CDRN ™) can help prevent and STOP chargebacks before they happen as well as provide a feedback loop to inform your front-end fraud control tools. Since chargebacks cannot be completely avoided, our Chargeback Revenue Recovery service provides representment expertise so you don’t leave money on the table. We’ll help you decide when to fight and when to walk away, so you can focus on what’s most important – running your business successfully.
Don’t forget…you can now download our updated ebook: What Every Card Not Present Merchant Should Know: Navigating Today’s Challenging Payment Ecosystem? Get it now!
What are your thoughts? Ping us on Twitter (@verifi) with #paymentstips and let us know what you think.

A monthly forum of compiled insight from top leading industry thought leaders to help you protect your payments and boost your profits

Question of the Month

What’s the biggest contributing factor to profit losses due to CNP fraud and friendly fraud?

Welcome to the May edition of the Verifi newsletter. Lack of merchant-issuer collaboration in the payments ecosystem has been a longstanding problem that has caused both parties millions in lost profits. This month, we’ll look at the benefits for merchants and issuers to work together to put a stop to fraud and friendly fraud. We’ll also re-visit Millennials and look at how they are shaping the banking world. Finally, we’ll look at what’s up-and-coming in the payments space, including contextual payments and Internet of Things.
PLAYING NICE IN THE PAYMENTS SANDBOX
CNP fraud – including friendly fraud – is on the rise. Additionally, merchants are losing hard-earned profits to chargebacks initiated by confused cardholders that don’t recognize billing descriptors. Add in the fact that merchants and issuers are not communicating, and you’ve got a recipe for disaster.
In the interest of customer retention, Issuers are inclined to adopt a “customer is presumed right” and “zero liability” mindset. Many issuers give customers temporary credits to their account in response to disputes, essentially freeing them from the responsibility of paying for the good or service. This process adds both cost and risk to the entire payments ecosystem.
Fraud and friendly fraud are not going away and merchants need a game plan to protect their bottom line. As e-commerce continues to rise, alternative payments continue to evolve and fraudsters get trickier, efficient collaboration and communication between issuers and merchants will be imperative to stop fraud and protect profits without harming the cardholder experience.
CAPITALIZING ON CONTEXTUAL COMMERCE
Contextual commerce pairs a consumer’s intent to buy with the context that makes it easy, fast and natural to go forward with the purchase. Uber is a shining example of how contextual commerce can be magical. The user procures a ride (an available driver in close proximity is assigned through the app) and since the Uber app stores payment info, no interaction or intervention is required during or after the ride to pay. The driver reaches the destination and the card on file is charged automatically.
There is plenty of room for this ideology to expand to other channels and platforms. Social media has started to scratch the surface, with sites like Pinterest adding buy buttons to their content, making inspirational purchases a reality for consumers who are motivated to buy based on the content they consume. The key is shortening the cycle between engagement and the actual purchase. The ideal is to present the product, gain instant interest and intent to purchase from the consumer and then make it possible to buy instantaneously.
THE MILLENNIAL “UN-BANKER”
When it comes to banking, younger millennials are far removed from the traditional ideas that the Baby Boomer generation embraces. Younger millennials are geared towards digital and avoid the physical assets associated with traditional banking (credit cards, checks, etc.) In fact, more than 20% of millennials have never written a physical check to pay a bill. This generation also avoids credit and lending – 63% of adult millennials do not have a credit card. Compared to consumers as a hole, only 35% of people over the age of 30 do not have credit cards.^{^[1]} This is a group of consumers set on making their digital – and only digital – mark.
Millennials are choosing to bank online through mobile apps, but even that could be falling by the wayside soon if banks aren’t able to connect with them on a more personal level. A recent report showed that 73 percent would be more excited about financial services advancements through tech giants like Google, Apple or Amazon than from banks, and 33 percent believe that soon they won’t need a bank at all.
UNFOLDING THE INTERNET OF THINGS
We’ve come a long way since the dawn of the Internet. As computer and Internet users, we’ve grown accustomed to the idea that we are the sole way for computers to get information. However, with the Internet of Things, we are beginning to see ways in which computers can begin to gather information for themselves. What this requires is that they be given their own “senses”…or sensors, to be exact. iBeacon technology has enabled computers to gather information about different objects…or “things”, making it easier for processes across a wide range of industries to be more automated.
While these technological advancements are undoubtedly “cool,” they also present serious security risks. On the other hand, they also present more opportunities for added security and authentication. Emerging technologies like biometrics make authentication more secure than ever, but it is not perfect. The potential for fraud and friendly fraud still exists and in some cases, may even be made easier. Hackers have already found ways to replicate fingerprints with a simple photo of a person’s hand, proving that merchants must still be on guard against fraud when it comes to using the latest and greatest technology to authenticate payments.
PARTING WORDS
Payments are moving faster than ever. Millennials continue to shape the payments landscape, causing merchants and banks alike to forge ahead into (often unknown) emerging technologies and digital payments. Additionally, expert outlooks point toward contextual payments, which will feed into the Internet of Things…making it easier than ever for motivated consumers to buy on the spot. While the payments universe seems to be expanding exponentially and at increasing speed, merchants always need to bear in mind that fraudsters are out there lurking, ready to take advantage of these new technologies – and holes in protection – to steal profits. As technologies revolutionizes payments, merchants need to ensure they’re paying as much attention to security and fraud prevention as to the next new shiny technology to ensure that their customers – and their bottom line – is protected.
Ask us how our Cardholder Dispute Resolution Network (CDRN ™) can help prevent and STOP chargebacks before they happen as well as provide a feedback loop to inform your front-end fraud control tools. Since chargebacks cannot be completely avoided, our Chargeback Revenue Recovery service provides representment expertise so you don’t leave money on the table. We’ll help you decide when to fight and when to walk away, so you can focus on what’s most important – running your business successfully.
Don’t forget…you can now download our updated ebook: What Every Card Not Present Merchant Should Know: Navigating Today’s Challenging Payment Ecosystem? Get it now!
What are your thoughts? Ping us on Twitter (@verifi) with #paymentstips and let us know what you think.
[1] https://www.firstdata.com/en_us/all-features/millennials.html

Whenever a credit or debit card is used, whether that’s a swipe at a grocery store or buying concert tickets online, there is a transmission of its numbers representing the payment account. Upon authorization, a common approach in ecommerce is to store the numbers in the merchant’s system to facilitate the exchange of money for goods or services. These stored numbers also attract those looking to steal that information, but a security measure known as tokenization is helping to make this kind of data theft much more difficult.
Credit card tokenization is a method of security in the payments industry in which a cardholder’s credit or debit card numbers are replaced as they enter a merchant’s system by a random string of numbers or symbols^[i]. This means the merchant does not have access to the actual credit or debit card number, which all but eliminates its sales system and data as a target for hackers.
Anything that can slow down data breaches is very much needed. In 2015, 170 million consumer records were uncovered by hackers, which globally cost businesses $400 billion^[ii].
Why some merchants are hesitant to adopt tokenization
Though an extremely effective solution to a very specific problem, tokenization is more of a single piece of the security puzzle than the end-all of stopping data theft and credit card fraud. Tokenization doesn’t guard against card skimmers, and it is not intended to be used as an alternative to EMV^[iii]. Additionally, this security measure doesn’t add any greater validation of the sale than what is already there.
Perhaps one of the biggest hurdles for widespread tokenization practice is the cost of implementation. Major companies might have the means to add it to their security protocol, but many medium and small merchants simply aren’t able to afford the added cost of tokenization^[iv]. The merchant is then faced with a less-than-ideal decision: go without or pass the cost on to the consumer. Both positions come with their share of problems.
Putting it all together
A closer look at the books, however, could reveal that It might make more sense to spend the extra money now to avoid a major hemorrhage later—essentially viewing the cost of tokenization like an insurance cost. Because it eliminates the need for merchants to actually store credit card data, tokenization can also significantly reduce PCI scope, which also means lower operational costs.
In addition to eliminating sensitive data from the merchant’s environment, tokenization can also help decrease instances of fraud and chargebacks that come from unauthorized use of credit or debit cards. A reduction in chargeback expenses—from issuing refunds for an otherwise valid sale to chargeback representment costs to fees and penalties incurred as a result of an increased chargeback rate—can more than make up for the added expense of a proper tokenization adoption.
However, this reduction in chargebacks as a direct result of tokenization isn’t something that will be seen until there is a grand-scale adoption.
Tokenization is a tool that should be combined with data encryption to meet data security best practices. It is a versatile security measure that can be applied to any transaction method that uses a credit or debit card, including emerging new payment methods such as mobile wallets. The best bet is a multilayered security strategy that makes use of various tactics, platforms and experts that protect merchants and their customers throughout the entire transaction lifecycle. These solutions often give merchants better insight into what’s working and what isn’t in terms of their security, and ways to detect fraud, resolve disputes early and avoid and reduce chargebacks.
The Identity Theft Resource Center reported that the number of exposed personal records more than doubled from 2014 to 2015^[v]. Without the proper tools and partners supporting them throughout the entire transaction, merchants may find their current security measures are inadequate, and could come crumbling down at any moment.
Download Verifi’s white paper today to learn more about the emergence of new payment methods, the security risks that come with them and what merchants can do about it.

[i] https://www.computerworld.com/article/2487635/data-security/banks-push-for-tokenization-standard-to-secure-credit-card-payments.html
[ii] https://www.cutimes.com/2016/01/06/cybersecurity-woes-to-intensify-in-2016
[iii] https://www.darkreading.com/perimeter/tokenization-6-reasons-the-card-industry-should-be-wary-/a/d-id/1316376
[iv] https://www.datacapsystems.com/news/2014/10/13/the-advantages-and-disadvantages-of-tokenization.html
[v] https://www.idtheftcenter.org/ITRC-Surveys-Studies/2015databreaches.html