Fraud is always shifting. Merchants need to stay ahead of the curve.
Seamless omnichannel experiences are redefining the customer experience, making shopping more convenient, more inclusive and more enjoyable. Merchants need to keep pace with rapidly changing customer habits while monitoring the constantly shifting fraud landscape.
Criminals love ecommerce too
Criminals will try multiple ways to get a hold of your goods without paying for them. As online purchases rise, fraud and transaction confusion are on the upswing, too. The result? Rising cases of costly customer disputes and chargebacks that erode the bottom line. That’s why collaborative tools and real-time insights are critical to identifying fraud early, preventing disputes and minimising the impact of fraud and chargebacks.
In Q1 2021, global ecommerce sales reached $876 billion, a 38% year-over-year increase.
48% of ecommerce merchants in Australia, the U.K. and the U.S. say chargeback volumes have increased at least 50%.
Chargebacks will cost $1 billion by 2023.
What's at risk depends on what you're selling.
Digital goods merchants
Merchants selling digital goods don’t have to worry about losing out on physical merchandise. But for typically low-value digital goods like streaming music and videos, the cost and time to process chargebacks can exceed their value. A high volume of disputes can quickly materialise into significant financial losses.
Physical goods merchants
Fulfillment of pricey physical products – such as luxury apparel or electronics – later reported as fraud can result in a triple loss. This includes the product, revenue, and the time and costs associated with the chargeback.
Disputes don’t need to disrupt your business.
Disputes can happen at multiple points along the post-purchase journey. That’s why collaborative tools that enable merchants and issuers to share dispute and fraud information are critical for preventing chargebacks no matter how or why they happen.
Top reasons for disputes
Transaction confusion. When cardholders check their digital banking app and see a transaction they don’t recognise, the confusion can result in “friendly fraud” – when cardholders dispute charges for purchases they legitimately made.
Customer disputes. Cardholders are increasingly disputing purchases due to service-related issues, such as an undelivered online order or damaged shipment.
Fraud. Even with enhanced transaction clarity, genuine fraud – when someone other than the authorised cardholder makes a purchase – remains a significant risk to merchants as card-not-present (CNP) transactions become the norm.
How to prevent
Richer purchase details. Putting transaction details in a cardholder’s digital banking app or to a card issuer’s call center can help reduce transaction confusion and prevent chargebacks.
Dispute notifications. Collaborative alert tools allow card issuers to notify merchants when a charge is being disputed for service-related reasons. This allows the merchant to refund the purchase and avoid a chargeback altogether.
Real-time fraud alerts. Real-time alerts reduce the time for merchants to be notified of confirmed fraud and disputes. They can stop fraudulent orders and refund charges before the costly and time-consuming chargeback process even begins.
Flipping the script on fraud
Clear insight into your fraud metrics is critical to understanding how your fraud-prevention strategies are working and to spot any anomalies as they happen. Visibility into your data provides critical insights to help you make decisions that protect your business from fraud, reduce transaction declines, and build a better customer experience.
The challenge
Inconsistent data. To understand your data you need to analyse it, but the exponential growth of data and its sources makes this time consuming and costly for merchants to undertake alone.
Lack of insights. Without access to the right data and insights, merchants risk operating with a huge blind spot – one that impacts their ability to know whether their fraud prevention strategies are really working.
Impact to customers. Without insight into the effectiveness of your fraud prevention strategies, there’s no way to understand the impact on your customers. This can result in unnecessary declines that add friction to your customer experience.
How to solve
360-degree view. Access a complete view of your fraud metrics – fraud, chargebacks and false declines – across your entire Mastercard payment portfolio.
Better data. The costs of fraud and chargebacks are often due to lack of data. Gain actionable insights to inform your fraud strategy and operations including the impact of 3D Secure, while improving acceptance rates of good transactions.
Enhanced customer experience. Leverage fraud insights to deliver a better customer experience that minimises fraud and reduces purchase friction.
Actionable insights that save your bottom line
Tap into the collective intelligence of our collaborative tools. Our network of card issuers and merchants provides unmatched near-real-time data. Give your business a leg up on fraud and transaction disputes with Ethoca Alerts and Fraud Insights for Merchants. Your bottom line will thank you.
Learn more about our collaborative technology
Ethoca Consumer Clarity™
Ethoca Alerts
Chargeback trends & outlook report
Download our latest report to peer into chargeback trends around the world, along with the growth of ecommerce—a key factor influencing chargeback volumes and CNP fraud.