The Newest in Chargeback Prevention –Fraud Alert Systems from Visa and Mastercard

Paying processing companies can minimize risks for high-risk merchants.

Key Takeaways

  • Fraudulent chargebacks have a significant negative impact on merchants.
  • Fraud Alert Systems and Rapid Dispute Resolution systems provide payment fraud solutions and chargeback prevention.
  • Partnering with the right payment processing company can help minimize risks for high-risk merchants.

According to the most recent Nilson Report on fraud losses in the credit card payment industry, fraud losses were nearly $12 billion in the U.S. in 2021. Fraudulent chargebacks have significant consequences for merchants, such as loss of revenue, reputation, increased processing fees, or loss of credit card processing ability.

What are Chargeback Fraud Alert Systems?

Traditionally, merchants were unaware of a fraudulent chargeback until weeks after it had occurred. However, new fraud alert systems are providing chargeback alerts to merchants sooner, allowing them to begin chargeback dispute resolutions quicker. Segpay,  a leader in digital payment processing and merchant services, implemented two new fraud alert systems this year, and users saw chargeback rates drop 20 basis points. These two new systems are:

Visa’s Verifi INFORM solution is a payment fraud prevention system for merchants. When a cardholder inquires about a transaction and the credit card issuer processes a consumer dispute, the merchant is automatically notified. This early notification provides the merchant with dispute details and allows them a chance to respond to the cardholder to resolve the issue. 

Mastercard’s Ethoca Fraud Alert System     When a card issuer informs the Ethoca network of a confirmed fraud or dispute, Ethoca sends an alert to the merchant. Merchants can stop the service and refund the customer before a chargeback is issued. Merchants benefit from quick identification of fraud and disputes, reduced chargebacks, avoidance of additional fees, and timely dispute resolution with cardholders.

Chargeback Rapid Dispute Resolution

Visa’s Rapid Dispute Resolution (RDR) enables sellers to resolve fraud and non-fraud disputes on all credit cards before the dispute is registered, so chargebacks do not occur. Before a chargeback is filed, disputes are automatically resolved in real-time with the cardholder at the point of inquiry. 

Merchants benefit by avoiding additional costly fees and fines and no assessment of penalties. Merchants reduce the risk of loss of processing privileges. Additionally, customers experience better customer service.

Partner with the Right Payment Processor to Minimize Chargeback Losses.

High-risk merchants are entities in fraud or chargeback-prone industries. Due to the risk involved in payment processing, high-risk merchants pay higher processing fees than traditional businesses. Payment processors that provide their high-risk merchant clients with information and resources to prevent fraud and minimize chargebacks can help these merchants keep more of their profits and protect their processing ability so they can continue to do business.

Segpay is a global provider of online payment processing. We offer secure solutions to help minimize risks to our clients through the following means:

  • Payment Fraud Prevention measures such as machine learning algorithms and data analytics can help detect and stop fraudulent transactions before they occur.
  • Chargeback alerts notify merchants that a chargeback has been initiated. Early notification enables merchants to take quick action to gather evidence and respond as soon as possible.
  • Dispute Resolution. Segpay assists merchants in preparing a case to challenge fraudulent chargebacks.

Segpay offers payment processing, merchant accounts, and gateway services to eCommerce and subscription-based merchants in various industries.

Want to learn more about the importance of chargeback protection?

Contact us today! We’d love to discuss how Segpay can safeguard your business operations and help you avoid chargeback fraud.  It’s another way we are here for our merchants All the Way to Paid ™. Reach out to us with your questions at [email protected] 

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