There is a pivotal scene in the film Taxi Driver, when Travis Bickle (expertly played by Robert DeNiro), is well into the depths of madness and utters the famous profane-laced rant, “Listen you … Here is a man who would not take it anymore…A man who stood up against the scum…Here is a man who stood up.”
This quote now relates to an increasing number of e-commerce merchants.
For the third straight year, e-commerce fraud and chargeback mitigation were popular discussion points at the Transact 16 conference and tradeshow at Mandalay Bay Las Vegas.
Two Reasons Merchants are Changing Their Attitudes
There is a significant shift that is taking place in the payments ecosystem. An increasing number of e-commerce merchants and businesses have had enough of chargebacks and other forms of fraud and are now defending themselves. It is the culmination of two things – one, a breached tolerance level from merchants (pardon the pun); and secondly, Visa laying down new chargeback rules.
EMV, Escalating Chargebacks and E-Commerce Fraud
It used to be that e-commerce merchants tolerated and absorbed the occasional fraud and chargebacks.
That line of thinking is so 2013.
It is universally believed e-commerce fraud is going to get a lot worse before it gets better, and recent projections from Verifi back that claim: Card-not-present fraud losses amounted to $2.8 billion in 2013 and are expected to increase to $7.2 billion by 2020.
Merchants, however, are increasingly realizing they have choices. We’ll get to those in a bit.
Visa’s New Chargeback and Fraud Monitoring Program
Effective Jan. 1, Visa lowered its chargeback threshold to 1 percent of all sales or 100 chargebacks per month across the board for both domestic and international transactions. It is forcing merchants and businesses to improve their practices – or risk being closed down by a bank.
4 Programs That Are About to Get Really Popular
The four panelists at the seminar ‘How EMV is Affecting CNP Business,’ at Transact 16 were asked what they saw as emerging solutions for fighting e-commerce and chargeback fraud. Four strategies and actions were discussed at length.
1. 3D Secure: Once deemed the trigger for shopping cart abandonment, 3D secure has become more seamless and allows consumers to assign a password to their credit card of choice when making a purchase, so long as the merchant employs the technology – either Verified by Visa, MasterCard SecureCode, J/Secure by JCB and SafeKey from American Express.
2. Chargeback Monitoring: More merchants are enlisting third party chargeback management firms to fight chargebacks and suspected cases of friendly fraud. Though some may find it costly, merchants are recovering lost revenue.
3. IP/Device Geolocation: IP/device geolocation could be a game-changer for e-commerce. When a consumer makes an online purchase, the merchant is able to verify the IP address and location of where the consumer’s credit card is being used. Merchants are able to match the consumer’s mailing address it has on file with the location of the device from which the purchase is being made.
4. Compelling Evidence: As we blogged two weeks ago about compelling evidence, an increasing number of merchants, as well as chargeback management companies, are employing this tactic of searching the social media channels of fraud suspects. It is shocking how many cyber fraudsters like to vaunt their conquests on social media.