• Latest

Merchants Should Be Wary of Payment Providers Getting into the Chargeback Guarantee Game

October 7, 2019
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud (Pt. 2)

February 22, 2023
Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

February 15, 2023
Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

February 7, 2023
Curbing emerging fraud types with network intelligence and data enrichment

Curbing emerging fraud types with network intelligence and data enrichment

January 31, 2023
Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud

January 10, 2023
How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

January 6, 2023

Anti-money laundering: Frequently Asked Questions

January 3, 2023
  • Contribute
  • Contact Us
  • About
  • Join Us
  • Advertise
Sunday, March 26, 2023
Merchant Fraud Journal
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
Merchant Fraud Journal
No Result
View All Result

Merchants Should Be Wary of Payment Providers Getting into the Chargeback Guarantee Game

by Bradley
October 7, 2019
in Articles, Fraud Prevention

TheDigitalArtist / Pixabay

No one could have foreseen the scope and scale of the eCommerce fraud prevention problem. From the beginning of online stores, unscrupulous actors began to target unsuspecting, hardworking merchants. Unfortunately, it appears that even if online commerce sparked a revolution in how businesses connect with consumers, it did nothing to curb the darker impulses of human nature.

Everyone hopes the day will come when no eCommerce fraud solution is needed. But while we wait for that day (check back next week maybe?), we’ve also seen a revolution in the good work being done by talented and dedicated fraud specialists to protect merchants against thieves. It’s thanks to these people that fraud prevention solutions made huge strides over the last decade.

Merchants around the world benefit from the recent improvements in rules planning, sophisticated AI machine learning, and human intelligence. Over the past year, however, payment providers have begun rolling out their own solutions — offering a critical service that allows the online payments ecosystem to thrive. That will increase penetration into riskier markets and products — but it also poses huge risks that need to be addressed.

The Promise and Perils of Payment Provider Chargeback Guarantee Solutions

Merchants turn to fraud prevention vendors for two reasons. One, is the need to protect their revenues from the ill-effects of fraud. But equally important is that merchants want a simple, easy-to-understand solution. There is a big learning curve for merchants in the fraud prevention space. Most want clarity and serenity as much as a chargeback guarantee.

On the face of it, payment providers starting to offer a native fraud solution is great news. Their brand recognition inspires confidence. For example, merchants the world over already use and trust PayPal. And that’s just the start. Their ubiquity means they process a huge number of transactions and are sophisticated technological actors, comfortable with collecting and analyzing data to make improvements for end-users. In addition, they can provide a “one-stop shop” that can make for a seamless payments experience.

And yet, there are a ton of negative potential consequences that should give merchants pause. Payment providers are in the business of collecting fees on transactions — not fraud prevention. In-house innovation is likely to be rare, leaving shops vulnerable to changing eCommerce fraud trends. A solution at the payment provider level also risks lulling merchants into complacency and a false sense of security. After all, who needs to take the time to understand the impact of fraud prevention on their business, if they know Stripe is already taking care of it?

What’s Needed Is Education, Diligence…and a Human Touch

These problems have (at least) four solutions.

First, vendors should do more to emphasize their fraud-specific experience and technological expertise. The average merchant still views fraud as “simple” chargeback prevention. Massive investment is needed to explain the technological, strategic, and tactical innovations necessary to prevent theft by increasingly sophisticated cyber-criminals — innovations payment providers are unlikely to fully commit to. Moreover, the potentially devastating impact an over-focus on chargeback prevention can bring via false positive declines needs to be better communicated to the market.

Second, payment providers must be transparent about their business model. A traditional chargeback guarantee solution only makes money on approved orders — a practice that keeps their business interests aligned with merchants’. In contrast, payment providers take a fee for every transaction, a potential incentive to not guarantee risky orders (but still profit on the transaction fee) while charging fraud prevention fees on safe orders. They must be proactive about ensuring their practices actually provide value to merchants, and provide full visibility so verification is possible.

Third, merchants must commit to doing their homework. No two businesses are the same. It might be that for a SMB just getting started in an industry with relatively little fraud, a solution at the payment provider level is sufficient. But for an equally small company selling an innovative product with high resale value, it will most likely be worth the time to choose a third-party fraud prevention solution. Merchants must understand their needs and be honest about what it takes to meet them.

Finally, the impact of eCommerce fraud needs to be humanized. Massive data breaches at gigantic global companies like the one that recently struck Capital One make for great headlines. They also serve to dehumanize the issue of fraud, making it less likely merchants will take it seriously (until it’s too late). Both merchants and vendors should focus more on the human impact of fraud —less time for founders to create visionary products, stressed employees, and even potential layoffs. Many businesses still do not fully realize the impact fraud can have beyond their bottom line.

Payment providers have a lot to offer the eCommerce fraud prevention space. But to avoid becoming a cure worse than the disease, they must integrate themselves into the existing ecosystem — not seek to replace it.

~The Editorial Board

Tags: Chargeback Guarantee
ShareTweetShareSend
Previous Post

Pearson Data Breach Compromises 100,000+ Students

Next Post

Influencer Insights: An Interview with Arcus FI

Next Post

Influencer Insights: An Interview with Arcus FI

Our Latest Reports

2022 Chargeback Consumer Survey Report

Fraud Prevention Tactics that Enable Exceptional Customer Experience

Addressing Payment Fraud and The Customer Experience in 2022

2022 Fraud Trends Report

ATO Fraud In Retail Report

2022 Customer Experience Report

3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue

Digital Trust And Safety Report: Combating the Evolving Complexities of Payment Fraud

On-Demand Webinars

Balancing Customer Experience and Fraud Prevention: What’s the Secret?

Stopping Fraud Across the Customer Lifecycle

Addressing Payment Fraud and the Customer Experience in 2022

 

Get the 2023 Fraud Trends Report

Search Our Site

No Result
View All Result

Our Sponsors

Featured Directory Listings

  • logo
    NoFraud
  • SEON. Fraud Fighters
  • sift logo
    Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Our Sponsors

Fraud Industry News

How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud (Pt. 2)

February 22, 2023

Connect With Us

Quick Navigation

  • Home
  • News
  • Join Us
  • About Us
  • Contact Us
  • Advertise
  • Contribute
  • Privacy Policy

The Payments Media Network

Merchant Fraud Journal
Payments Review

Privacy Policy

Our Privacy Policy
Our Terms of Use

Resources

  • Articles
  • eCommerce Fraud Reports
  • eCommerce Fraud Webinars
  • Training and Certifications
  • Jobs Board
  • Associations and Non-Profits
  • Podcasts
  • Vendor Directory

Popular Posts

  • How Does Two-Factor Authentication (2FA) Work?

    How Does Two-Factor Authentication (2FA) Work?

    0 shares
    Share 0 Tweet 0
  • How to File a Claim With FedEx + What To Do If Claim is Denied

    0 shares
    Share 0 Tweet 0
  • Top eCommerce Fraud Prevention Companies

    0 shares
    Share 0 Tweet 0
  • The Best Reverse Email Lookup Tools in 2022 (with pricing)

    0 shares
    Share 0 Tweet 0

Featured Vendors

  • NoFraud
  • SEON. Fraud Fighters
  • Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Download the 2023 Fraud Trends Report

No Result
View All Result
  • About Merchant Fraud Journal
    • Interested in Contributing or Guest Posting to Merchant Fraud Journal?
  • Advertise on Merchant Fraud Journal
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Contact Us
  • Download Addressing Payment Fraud and Customer Experience Report
  • Download Chargebacks Consumer Survey Report 2022
  • Download Evolving Complexities of Payment Fraud Report
  • Download Fraud Prevention Tactics that Enable Exceptional Customer Experiences Report
  • Download Merchant Fraud Journal 2023 Fraud Trends Report
  • Download the 2020 Chargeback and Representment Report
  • Download the 2020 Merchant Fraud Journal Vendor Guide
  • Download the 2021 Fraud Trends Report
  • Download the 2022 Fraud Trends Report
  • Download the 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue Report
  • Download the MFJ 2022 Customer Experience Report
  • Download the MFJ ATO in Retail Report
  • Home
  • Job Dashboard
  • Join The Merchant Fraud Journal Community
  • Merchant Fraud Journal Advertising Agreement
  • MFJ Fraud Trends Report Giveaway
  • News
  • Post a Job
  • Privacy Policy
  • Resources
    • 2020 Chargeback Representment Guide for Merchants
    • 2020 Vendor Guide
    • 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue
    • Addressing Payment Fraud and the Customer Experience in 2022
    • Associations and Non-Profits
    • ATO Fraud In Retail Report
    • Balancing Customer Experience and Fraud Prevention: What’s the Secret?
    • Chargebacks Consumer Survey Report 2022
    • Digital Trust & Safety: Combating the Evolving Complexities of Payment Fraud
    • eCommerce Fraud Reports
    • eCommerce Fraud Webinars
    • Fraud Prevention Tactics that Enable Exceptional Customer Experiences
    • Fraud Prevention Training and Certifications
    • How to Build a Recession Proof Chargeback Prevention Strategy
    • How to Stop Fraud During the 2022 Holiday Season
    • Jobs Board
    • Merchant Fraud Journal 2023 Fraud Trends Report
    • Merchant Fraud Journal’s Fraud Trends 2020 Report
    • Merchant Fraud Journal’s Fraud Trends 2021 Report
    • Merchant Fraud Journal’s Fraud Trends 2022 Report
    • MFJ’s 2022 Customer Experience Report
    • Podcasts
    • Prevent High-Velocity Fraud Attacks During the 2021 Holiday Season
    • Stopping Fraud Across the Customer Lifecycle
    • Vendor Directory
    • Webinar – Addressing Payment Fraud and the Customer Experience in 2022
    • Webinar – Mitigating Fraud and Risk on the ACH Network
    • Win January Chargeback Disputes
  • Subscribed
  • Terms and Conditions

© 2021 Payments Media Solutions Canada Inc.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?