Christmas: a time of joy or transaction disputes?

Christmas is well and truly on it's way, and that can only mean one thing: the e-commerce world is heating up thanks to copious amounts of Christmas shopping. Looking back to 2017, mobile sales accounted for 34.5% of all e-commerce sales. By 2021, mobile sales are forecast to account for 54% of total e-commerce sales. Whilst these figures present exciting growth opportunities to any merchant operating within an omnichannel structure, the potential should be approached with caution. Because nothing can detract from a successful holiday sales period more than transaction disputes, fraud, and merchant errors.

Data is the key to Frictionless Payments

Today’s e-commerce shoppers expect a smooth, efficient, and trouble-free transaction, and fraudsters see this as an opportunity. This balance between security and frictionless purchasing creates an environment for technically savvy opportunists to engage in thievery and deceivery. It’s unfortunate when all merchants and most customers are concerned with is ensuring the purchase and delivery of gifts, winding up festively wrapped and under the tree before December 25.   

Once the Christmas rush is over, merchants should be able to look ahead to post-holiday sales. However, it is typically not until celebrations come to an end that merchants have to deal with customer billing confusion and fraud. Storing detailed purchase data gives merchants the information needed to track transactions, stop fraud and prevent chargebacks where possible. Unfortunately, this data is useful only when a customer contacts the merchant as the first point of contact in a payment dispute – but this is rarely the case.  

Customers bypassed merchants, going directly to their issuer in up to 76% of dispute cases, according to a Javelin Strategy & Research report commissioned by Verifi. Although this course of cation may seem logical to the customer, it’s not ideal as issuers don’t have the same detailed transaction data as merchants, making it hard for issuers to effectively resolve the dispute. The result is often a provisional refund and a costly chargeback. For the business fraudster, this means “free” merchandise and unwarranted refunds. However, there are opportunities for merchants and issuers to share transaction data, resolve disputes, and prevent chargebacks.

Data-Sharing is a balancing act of risk and reward

Customers trust merchants to protect their data, and in turn merchants must do everything in their power to maintain that trust. A data breach broadcast in mainstream news and circulated via social media can be devastating to a merchant. Complacency in the card-not-present (CNP) marketplace is the greatest threat to detecting, deterring, and preventing fraud in digital and mobile channels. Fraudsters cleverly look to exploit gaps in a merchant’s security policies and procedures. They understand that merchants struggle to keep up with evolving payments innovations and make their living pouncing when merchants are most vulnerable, such as during the ultra-busy Christmas season. Before partnering with an issuer to share data and resources against chargebacks, merchants need to ensure that their security standards protect against any breach of customer data. 

Data is more valubale than money

To benefit from the best practice of sharing data, merchants need to ensure a multi-step process has been conducted and is regularly audited. This includes: 

•  Conducting a data privacy audit: Identify what data your business needs and the actual data you are collecting.
• Only keeping necessary transaction data: Key transaction details, such as product purchased, merchant name and contact information, type of device used for the purchase and customer name, username, IP address, location, phone number, and email address. To help identify true fraud, retain customer information including their transaction history, previous transaction disputes, and refunds issued.
• Protecting all data you collect: Ensure your network, databases, and website are secure from hackers with regularly scheduled reviews and testing.
• Securing customer data: The customer service team needs to be up to date with best practices and current technology. Train your customer data team never to give out credit card information, addresses, phone numbers, or passwords unless they can verify the customer’s identity with security questions before proceeding with discussing their account.
• Clearly communicating your privacy policy: In addition, make sure you keep your customers current on any changes to your policy.

Keep the festive spirits up

Merchants and issuers alike seek to actively prevent chargebacks and fraud – but they must be especially vigilant during the busiest shopping period of the year. Fraud and mass scale chargebacks not only affect profit but can also result in reputational damage to merchant brands. By capturing, securing, and sharing transaction data with issuers, merchants can leverage their most fundamental tool to maximise profits and minimise disputes, during and following the holiday shopping season.