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Consumer requests for refunds on remote transactions are a growing problem in Europe for merchants. This article answers the most often asked questions on the basics of chargeback mitigation and talks about how to secure Ecommerce Fraud using Ethoca to help your business be safe and profitable.
What is a chargeback?
A chargeback is a process by which a cardholder disputes a card transaction in EUR, USD, or any other currency to request a refund after a payment they consider fraudulent or for which they believe they did not receive the product or service purchased. This means that a merchant should transfer money at their own expense, lose the product and pay all the fees.
Types of chargebacks
We can divide chargebacks into three categories:
Criminal fraud
Criminal fraud chargebacks occur when a fraudster makes an unauthorized credit card transaction. Merchants can reduce these chargebacks by implementing powerful anti-fraud systems, like the Ethoca solution integrated with Covery, that helps define a money fraud.
Seller’s error
A seller’s error chargeback occurs when a chargeback is caused by a mistake made by the seller, such as the delivery of the wrong product. However, even this situation leads to a money loss. While we may consider this case to be a fair one.
Friendly fraud
Refunds for friendly fraud involve customers who abuse the refund process by declaring valid transactions as fraudulent in order to get a refund. The payment system built based on the Ethoca network can also help to solve these problems.
How does a salesperson deal with this problem?
Here, we have three types of returns that negatively affect your business. And there’s a solution to that. Now there’s already a Secure Ecommerce from Fraud network that allows cardholders and merchants to collaborate and exchange information in real-time. It’s based on Ethoca, which works by transmitting vast amounts of data about merchants to consumers, i.e. cardholders.
This approach makes it possible to find an understanding of every problem and allows you to transfer money to cardholders to satisfy their claims before they create a full-scale chargeback dispute.
The entire network is built on a linked MaxPay Account and an open account on the Ethoca website, making it easy to work with the data. All you have to do to get started is to open an account for the Secure Ecommerce Fraud system by Ethoca or link a MaxPay Account that you already have. With these simple procedures, you’ll have access to the database and save yourself from extra expenses when dealing with chargebacks.