The last few years has shown significant growth for card-not-present retailers. Recent reports from Visa show transaction volume surged by an impressive 51% from 2019 to 2021.
Unfortunately, disputes also began to climb, growing 29% over the same period, from just under 6 million disputes filed to nearly 8 million in 2021.
Friendly fraud, or first-party fraud, occurs when legitimate customers dispute legitimate online purchases with their issuing banks or credit card companies.They may do this for any number of reasons, but the consequences for retailers are the same. If the bank sides with the customer, the dispute becomes a chargeback.
If a retailer’s chargeback rate exceeds 1%, they are put on a Visa or Mastercard card processing fraud monitoring programme which will result in fines and increased fees to the schemes. Unless they can reduce the rate to less than 1% within three months, these key card issuers may prevent them from taking card payments altogether.
40% of consumers say if they’re declined at the point of payment, they will go to a competitor. So the retailer also risks losing the value of that checkout for the lifetime value of a customer who may never come back.
Within the new regulatory framework of PSD2, to avoid friction and possible basket abandonment, retailers need to leverage exemption. But many need support to apply exemptions while meeting the regulatory requirements.
Kount, an Equifax company, has built a set of tools to aid retailers struggling to meet these demands while preventing disputes from progressing to chargebacks unnecessarily. Kount scrapes information from transactions and sends the data to issuers in real time, by identifying issues within 24 hours, retailers can stop the shipment of goods on disputed orders, retain fulfilment, shipping, and product costs.
This support system allows retailers to implement a complete strategy to protect themselves from pre- through to post-authorisation, and in turn reduce chargeback rates by 60-70%.
For more information or to set up a demo, please visit our Kount website.