How Chargebacks Can Help You Battle Credit Card Fraud Right Away

Written by Wall Street News on February 23, 2016. Posted in Card not present fraud prevention, Ecommerce merchant account, Payment services

Credit cards payment system

People once predicted that cash would become obsolete and everything would be done with a swipe of a plastic credit card. Although cash is still around, credit card use is still on the rise, especially with the rise of online shopping. According to a Forrester Research survey conducted in 2014, online retail is supposed to hit sales of almost $375 billion in 2017 — up over a $1 million from 2012. However, as credit card use increases, so does the opportunity for credit card fraud. Studies have shown that six out of ten consumers are worried about credit card fraud when they make purchases online. Although retailers have made strides in ensuring secure payment for consumers and making sure that payment processing services have stricter security, the fear is still out there. It’s in their best interests to prevent a chargeback credit card, where they lose money on the transaction being refunded.
Why Are People More Worried About Credit Cards Now?
More people have access to the Internet with their tablets and smartphones, so it makes sense that more commerce is being done online. And obviously, online purchases can’t be done with cash and are transacted using a credit card. Contributing to this is that according to a Statista report in 2015, buying bulk items online or more expensive goods can be cheaper or have some kind of incentive, so consumers end up buying more — usually almost $80 an order. Want that free shipping? You’re going to try to get your bill up to $50!
According to an eMarketer report released in 2015, almost 75% of all Internet users had bought something online in a year in 2013. Also in 2013, almost $5 million was spent using credit and debit cards and every 30 seconds, global e-commerce produces over $1 million in sales. Higher traffic means higher risk of potential credit or debit card fraud.
What Does a Chargeback Credit Card Mean?
Don’t be confused by terms: cashback and a chargeback credit card are two totally different things. Cashback rewards you when you purchase certain items affiliated or partnered with your credit card holder with a small percentage of cash back. A chargeback credit card happens when fraudulent activity takes place on your card and you want to dispute it. (You can also try to get a chargeback transfer for other disputed claims, without having to argue with the retailer.) You can only do it at a certain point in the billing and payment cycle though, so businesses have some measure of protection. Essentially, when a chargeback is put into motion, the merchant or retailer is forced to reverse the transaction and refund the customer.
Sometimes chargebacks occur because a customer receives the wrong item or a broken or defect item. Naturally, fraud is a huge cause of chargebacks, where unauthorized payments are made on a person’s card without their knowledge or approval. Additionally, entering the wrong credit card information or charging a customer twice for a purchase could also lead to chargebacks.
How Are Businesses Making Sure Chargebacks Don’t Happen?
It’s in a business’s best interests to reduce the amount of chargebacks that happen. It costs them money and can often make customers upset or irritated. There’s also a certain measure of trust lost when something gets messed up and the customer may not return to that business the next time he or she needs that good or service.
Making sure that your system helps protect against credit card fraud (can your system process that new chip technology for example?) can help protect against chargebacks. Additionally, having a legitimate business name that will show up on their transactions or billing statements will also help keep customers from thinking that they were charged in error and illegitimately. Make sure your customer service is alert and ready to help in any situation as well.
It’s in everyone’s best interests to help eliminate chargeback transfers — the customer gets what she or he wants and feels secure and the business is able to keep the money from the transaction that they earned in the first place.

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