Payments and risk management solutions provider Verifi, which specializes in serving CNP merchants, just recently announced the launch of a new platform that aims to improve efficiency and cut down on unnecessary chargebacks and fraudulent claims.
Verifi has found that up to 86 percent of cardholders today will bypass the merchant when questioning or disputing a charge and directly contact their issuing bank instead. In some cases, Verifi has found that cardholders will use the dispute process as a means to seek a refund — a practice referred to as first-party or “friendly” fraud. Since issuing banks don’t typically have access to specific purchase details, they will often credit the cardholder and issue a chargeback to the merchant.
According to research cited by Finextra, as much as 70 percent of chargebacks are the result of first-party fraud.
“Fraud and chargebacks continue to be a major issue for merchants and will continue to grow as shoppers migrate more of their shopping to online and mobile commerce,” Matthew Katz, CEO of Verifi, was quoted as saying. “Order Insight is the next phase of our services evolution where all parties are connected to work together for mutual benefit.”
Verifi’s solution enables cardholders, merchant and issuers to share order details in real time, allowing issuing banks and cardholders to determine a sale’s validity when a dispute occurs. The transaction information provided to all parties includes merchant name and contact information, purchase date, type of device used when ordering as well as descriptions of the item(s) or service(s) purchased.
Order Insight allows a bank’s call center representatives, for instance, to access the information they will need to identify and verify potential true cases of fraud, as well as the means to identify fraudulent behavior on the part of the cardholders themselves.
Increased purchase information visibility for all involved parties will reportedly work to enable merchants to avoid profit loss from unwarranted chargebacks, allow issuers to provide a more thorough customer experience and allow cardholders to access additional, clearer information on their purchases.
“We saw great initial results and received some important learning to enhance our offering in our product pilot,” Katz said. “Our clients retained over 25 percent of their at-risk sales up front and resolved the remainder of their disputes efficiently without getting hit with the added expenses associated with them becoming a chargeback.”