Visa has announced stricter chargeback rules affecting its dispute monitoring programs for both merchants and acquiring banks.
A chargeback – when a consumer asks his credit card provider to refund a payment – is every merchant’s nightmare. It’s bad enough when a chargeback stems from an actual fraudulent transaction. Worse are the chargebacks that could have been avoided; for example, a consumer doesn’t recognize a charge – or is simply unhappy with a purchase – and calls the credit card company instead of you. You lose the sale and incur fees and, potentially, fines as well. And with too many chargebacks, banks could deem you too high a risk and freeze or even close your merchant account. Your business’s very existence is at stake. The good news: there are simple, common-sense measures you can take today to prevent most chargebacks from happening. Here are a few:
SegPay now gives you another tool in the ongoing fight against chargebacks and fraud. In late 2016, we introduced 3-D Secure (3DS), the latest fraud prevention initiative from MasterCard and Visa. 3DS adds an extra layer of security, helping prevent unauthorized use of a consumer’s credit card and potentially freeing you from liability in the case of fraud or chargeback. And, 3DS helps save sales that otherwise may have been declined for fraud – we’re seeing between 2-7% of sales saved, on average.
You may already be familiar with 3-D Secure programs under the names Verified by Visa and Mastercard Secure Code. Purchases by consumers whose issuing banks are enrolled in one of these programs are authenticated by the 3DS system. This happens quickly, and behind the scenes in the vast majority of cases, so consumers don’t see it and there is virtually no risk of a sale being abandoned. In very rare cases where certain fraud indicators are triggered, the consumer is prompted to enter a passcode, which is authorized by the issuing bank. These are the sales that would have been declined, and most likely lost, prior to 3DS.
You can customize 3DS to make your fraud detection more strict in certain cases, strengthening your chargeback protection. Just contact us and we’ll set it up for you.
Once a consumer is authenticated via 3DS, potential liability for any chargeback or fraud shifts to the cardholder – in most cases – and away from you. Note that for subscription products, the shifted liability only applies to the initial purchase and not recurring charges (rebills). This is also the case for One Click purchases. Even in those cases where liability does not shift, 3DS protection means the likelihood of chargeback or fraud is greatly reduced.
Call or email us anytime to learn more!