May 03, 2019

E-commerce companies must take an increasingly holistic and proactive approach to fraud prevention if they are to keep pace with the growing demands of consumers and of payment processors such as Visa and Mastercard.

Customer expectation levels are consistently high, as shoppers everywhere demand unimpeded financial transactions at all times. For merchants, this represents a significant challenge because they are faced simultaneously with the need to block a widening variety of attempted fraud attacks.

In this environment, Visa is reducing its accepted level of chargebacks. Merchants must take the issue very seriously, as it is a matter of real strategic importance with millions of dollars at stake (in 2017, merchants lost a total of $19 billion to chargebacks, according to Javelin Research).  

Visa Lowers Accepted Chargeback Rate From 1% to 0.9%

Visa’s change is significant – for the first time in a decade, it will reduce its tolerated ratio of legitimate transactions to chargebacks among merchants using its services. The change comes into effect from October 1, 2019, with the ratio being dropped from 1% to 0.9% of transactions. It may seem like only a small figure change on the surface but it’s a net that could catch merchants for many more of their chargebacks. In essence, Visa is requiring merchants to get a better grip on fraud, right now, and to invest in strong preventative technology and effective processes.

Any e-commerce firm that falls foul of Visa’s new chargeback ratio could find itself being fined heavily, or dropped altogether by what is, of course, one of the foremost processors of debit and credit card payments across the globe. For merchants, such an outcome is almost unthinkable: it would heavily erode revenues and damage customer perception.

All of this puts a strong emphasis on the issue of fraud prevention. A growing number of large-scale merchants are beginning to take a more holistic approach to tackling fraud, stopping it at the account level well before transaction. But others will be worried by the incoming chargeback ratio reduction, particularly if they have already been struggling to stay below the existing higher threshold.

Get Ahead of the Change

As it stands, too many merchants remain reliant on what are outdated fraud prevention tools that are simply no longer fit for purpose. Contemporary business demands a much more proactive response and a commitment to using smart technologies. These include the latest machine learning fraud prevention tools, which identify fraudulent transactions early on yet do not impede genuine payments.  

Consumers today demand quicker, real-time decisions on their payments so they can simply buy and move on. They expect their transactions to be carried out without hold ups or friction of any sort. Meanwhile, payment processors are demanding higher standards of fraud prevention, in order to protect those consumers as the vectors of fraudulent activity continue to diversify and spread.

For e-commerce companies, the challenges are clearly very real, and they are constantly growing in scope. It’s imperative, therefore, that merchants don’t allow themselves to get left behind if they want to remain competitive and deliver high quality service. Many consider working with a fraud prevention partner such as Forter who they can trust to support them – not just in dealing with the issues they currently face, but also in preparing for serious threats yet to come, wherever they operate.

Find Out How Forter Can Help

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