Minimize Fraud Losses with Chargeback Solutions

The rising cost of investigating fraudulent transactions

Merchants are on the back foot against an agile adversary. It’s not hard to see why. Fraudsters have many advantages, including ready access to anonymizing tools, and bots which can automate the testing of stolen credentials and card details on an industrial scale. Other technology enables them to spoof devices and mimic user behavior. And there’s a huge readymade underground market for stolen identity data which they can tap.

It can seem like every move merchants make to improve their detection models, the bad guys simply respond by tweaking their own modus operandi; finding ways to outwit their opponents. This matters a great deal to the bottom line. When merchants unwittingly ship an item to a fraudster, they not only end up paying chargeback costs, but will also be out of pocket to the value of that item. That’s not to mention the potential brand damage and customer churn that can result, as well as the cost of investigating the fraud.

Financial burden of a transaction dispute to merchants

In fact, the financial stakes are so high that many merchants may respond by erring too far on the side of caution, which can result in rejecting legitimate customers. Or else they step-up transactions for extra scrutiny, which leads to extra operational overheads and can worsen the customer experience by delaying shipping and inconveniencing the buyer.

Financial and business risk doesn’t end with the purchase. Sometimes merchants get hit with a transaction dispute—perhaps claiming that an item didn’t arrive, or that it was damaged in some way. These have been made so easy for cardholders to file that merchants may be overwhelmed by dispute volumes.

What do they do? Fail to respond and the cardholder’s bank will rule in favor of the buyer—again at a cost of the shipped item and the chargeback value. But investigating all disputes could put an inordinate burden on in-house resources. Allowing through low-value transaction disputes could also incur a significant financial burden. It’s a lose-lose.

Manage chargeback risk with an expert payment processor

There are a few good options. But by working with an expert payment processor like PayPal Braintree, merchants have an opportunity to minimize their losses, optimize precious time and money by reducing evidence manually compiled, save time dealing with payment processor or bank, and ultimately help to grow the business.

PayPal also offers Dispute Automation, which enables merchants to manage the process with minimum fuss, by auto-populating dispute forms. The more they can contest, the more they have a chance of winning. Using machine learning, it can even predict how much money merchants are likely to recover from ongoing disputes.

There’s no silver bullet when it comes to tackling payment fraud and chargeback risk. But with PayPal on their side, and chargeback solutions in place, PayPal, much like a stunt double, can take the hit.

Want to learn more about PayPal is helping business go beyond checkout? Learn more https://www.paypal.com/us/brc/article/enterprise-payment-processing-challenges.