Payments:
Chargebacks - A natural cost of doing business?
Chargebacks are a common issue that merchants face in today's e-commerce landscape. These chargebacks can arise from various reasons such as fraud, unauthorized transactions, or customer dissatisfaction. Whatever the reason may be, the financial and reputational impact of chargebacks can be severe. However, with the help of advanced technologies such as geolocation and proxy piercing, businesses can minimize their chargeback risk and protect their bottom line.
The impact of chargebacks on businesses cannot be understated. According to a report by Statista, chargebacks increased by 23% from 2018 to 2020, with merchants losing an estimated $25 billion in 2020 alone. Moreover, the report estimates that by 2023, chargebacks will cost merchants over $40 billion per year. These staggering statistics underscore the need for businesses to take chargeback prevention seriously.
Verify At The Core of Every Engagement Online
One way to prevent chargebacks is to implement a multi-layered KYC data hub orchestration with advanced risk analysis engine, which is exactly what AcuityTec offers. This solution allows businesses to customize their approach to chargeback prevention by analyzing a wide range of parameters such as geolocation, device fingerprinting, and behavioral patterns.
Geolocation is the practice of finding the geographic location of an object, usually an electronic device such as a phone or computer. Geolocation services focus on collecting data beyond the geographic coordinate, which is where Proxy Piercing technology comes into play. Proxy piercing technology can identify if a user is trying to mask their IP address using an anonymous proxy or VPN service, which is a common tactic used by fraudsters.
Knowing where a customer is at the time of purchase is helpful to businesses, and geolocation services can be used for fraud prevention and regulatory compliance. Geolocation services can show a merchant if the customer is trying to hide or disguise their location. If the billing address and shipping information are different from the purchase location, merchants can flag this type of scenario. The customer might be on vacation, or they might be trying to make fraudulent purchases.
Acuitytec determines the real IP address and compares that to the profile IP to detect risky or suspicious activity. By analyzing a customer's geographic location and identifying if they are using an anonymous proxy or VPN, businesses can prevent fraudulent transactions from happening in the first place.
Furthermore, there are certain industries that need to validate that the customer is in a specific location. Certain countries have strict cross-border regulations, which require companies to only serve customers in a specific geographic location. Geolocation can monitor and validate that customers are in the correct region and flag customers who are trying to access services from a prohibited location.
Leveraging Risk Scoring, Behaviour and History
Real-time risk scoring and fraud alerts allow businesses to automate transaction rejection based on a high score threshold and targeted risk alerts. By automatically rejecting transactions that have a high risk of being fraudulent, businesses can reduce their chargeback risk and prevent losses.
In addition to real-time risk scoring and fraud alerts, user profiling helps businesses identify potential fraudulent activity based on a customer's behavior and transaction history. By analyzing this information on a customer a business can detect patterns of fraudulent activity and prevent it from happening in the future.
Acuitytec's Capture Queue allows businesses to track activity and acceptance rates from card level and type, with the ability to create actions based on decline codes. This can help businesses identify which transactions are likely to be fraudulent and take proactive measures to prevent them from causing damage. By avoiding refunds and compensations, businesses can reduce their financial losses and protect their bottom line.
Another useful feature of the Capture Queue is the Sticky feature option for repeat customers. This option allows businesses to bypass verification queries on repeat customers with the same information, reducing costs and streamlining the checkout process. By automating these tasks and minimizing user interaction, businesses can free up resources and focus on other critical aspects of their operations.
Negative and Whitelist Databases
Global and Local Databases are essential tools for businesses that want to take a proactive approach to fraud prevention. These databases can help businesses identify high-risk transactions and customers, both inside and outside their network. By analyzing data from multiple sources, businesses can develop a comprehensive view of potential risks and take steps to mitigate them.
One key advantage of Global and Local Databases is the ability to set trust levels while effectively managing customer data. By using negative and white list databases, businesses can quickly and easily determine which transactions and customers are trustworthy and which ones are not. This can help businesses streamline their operations and reduce the risk of fraudulent activities.
Business Intelligence
Another important aspect of fraud prevention is Business Intelligence. Reporting and analytics tools can help businesses identify patterns and trends in their data, which can be used to identify potential risks and develop strategies to mitigate them. Risk pattern assessments can help businesses determine the likelihood of fraudulent activities and take steps to prevent them from occurring. Traffic and rules monitoring tools can also help businesses detect unusual activities and take action to prevent them from causing damage.
In summary, Global and Local Databases and Business Intelligence tools are critical components of a comprehensive fraud prevention strategy. By leveraging these tools, businesses can identify potential risks, set trust levels, and take proactive measures to prevent fraudulent activities from occurring. With the help of a trusted partner like Acuitytec, businesses can implement these tools effectively and protect themselves and their customers from financial loss.
Learn more about our KYT verification suite to bring confidence to online payments or contact us to book a demo today.