Hi. Welcome to Whiteboard Wednesday.
We’re back again talking about this time fraud and what it means to your online
business or your mobile business. So, there’s different parts in the
chain as we spoke about before. The consumers, this is your webstore or your
e-Commerce site, the acquirer; Visa, MasterCard, and the card issuers. And the issuers
issue the cards to the consumers. I think what’s important right at the beginning
is to say that merchants are obliged to undertake and conform to the card scheme
rules, and unfortunately what that means is that the onus of responsibility on
the merchants is that they have to protect themselves against consumers
that are trying to defraud them or, innocently, not understand the card
transaction. So, I’m gonna talk about fraud, the different aspects of fraud, and what a merchant can
do to help reduce fraud, potentially, to their business. So, normal transaction,
a cardholder or a consumer will come onto the website and make the
cashier and purchase the transaction and it will go through as previously explained.
Now sometimes when the goods and services are given out by the
merchant, the consumer will actually see on his statement and he won’t recognise
the transaction from the merchant. So, for example, it could be a phone shop
but the description of the phone shop on the guy’s statement says it is selling pens,
for example. Well that doesn’t add up, and the consumer will then query the
transaction and potentially raise a chargeback over a full transaction with
his issuing bank. Now, if that happens on the descriptor, the consumer needs to
provide evidence to the issuer that he didn’t buy that transaction or he didn’t
understand what that transaction was. The acquirer of the transaction will contact
the merchant and then the merchant needs to investigate that transaction to the
level to say “well, actually I’ve released those goods and services to the consumer.
It was a phone dispatch and I can prove that it was to his address and we
delivered the goods to him”, and that will hopefully be enough evidence to stop the
transaction being charged back and potential fraud happening. But it’s quite
an interesting conversation, because some consumers also take part in friendly
fraud, and what does that mean? The transaction has been, or the goods
have been delivered, and the consumer sometimes says “I didn’t receive the
goods and services, and, therefore, if they’re saying they’ve never received
them and paid a thousand Euros for this phone, then the merchant’s in a hard place to prove
that he did receive those goods and services, and maybe potentially has lost the
phone and also needs to refund the transaction to the consumer. So, it’s
really important a merchant has good processes in place when he dispatches
items that a consumer signs for the goods and services, that they receive
on the doorstep to them, to protect themselves against potential fraud.
There’s other ways to talk about fraud as well and what the merchant can do to
mitigate potential chargebacks and fraud. You may be aware of legislation across
Europe called PSD2, those transactions and that legislation starts to come
into force, where any transaction about 30 Euros it will be mandatory that a
transaction is facilitated with 3-D Secure. So what is 3-D Secure? We all get our cards from our issuer and they deliver
on our doorstep in the post and we need, you may have seen, to register our cards with the
issuer, and we have to provide the issuer with additional information which is unique
to you, which is something you know, something you have, or something you
are. That is secure information. When the transaction goes to the merchant, then
a window comes up that you might have seen under Verified by Visa or
Mastercard SecureCode. That’s also referred to as 3-D Secure, whereby this
information is requested for the transaction. It makes it more secure and the
consumer is a confirmed consumer to the merchant store, and that helps reduce
the chargebacks and fraud, potentially coming into your store. Additionally,
I’ve mentioned in earlier Whiteboards that you will have, as a merchant, a
choice of your gateway partner, and your gateway partner will also offer you, or
should offer you, a fraud tool to be able to understand unusual transactions. So IP
address, large transaction, velocity, first transactions for large goods and
services for the first purchase transactions. So the merchant can also
incorporate fraud tools over and above 3-D Secure to help reduce potential fraud as
well. So, ask your acquirer what fraud tools that they have got which will
help also add to the jigsaw puzzle to mitigate fraud and chargebacks for you. So I’ve hope that’s helped, thank you
for watching Whiteboard Wednesday, and we’re here happy to help. Thank you.