A global payment solutions provider has warned SMEs of the soaring rates of chargebacks and card fraud, calling on merchants and banks to work together to stamp out the problem.
Matthew Katz, founder and CEO of Verifi, said that of the US$10 billion in transactions his firm processes globally each year, Australia and New Zealand have emerged as hotspots for payment fraud and chargebacks.
“The Australian and New Zealand payments landscape is shifting,” he said.
“With online spending growing five times faster than traditional retail, merchants and card issuers need support in dealing with the mounting threat of Card-Not-Present (CNP) fraud and ‘friendly’ fraud and the chargebacks that result.”
Mr Katz referred data from the Australian Payments Network that showed card-not-present fraud accounted for more than three-quarters (78 per cent) of all card-related fraud in 2016.
He added that research by US-based firm Aite Group suggest 75 per cent of chargebacks are from consumers “manipulating the system”, which he labelled “friendly” fraud.
“Typically, a cardholder will bypass the merchant and contact their issuing bank directly to dispute or question a charge on their bill,” said Mr Katz.
According to Mr Katz, merchants need to work more closely with their banks in a unified front to stamp out fraud, given that it is only set to increase amid a backdrop of strong online spending growth – up 14 per cent in 2017 alone.
Last year, regulators admitted to My Business they were effectively unaware that chargebacks were a serious ongoing concern for businesses, meaning any form of legislative support is a long way off.
“Merchants and issuing banks must work together to combat fraud, prevent and resolve costly chargebacks, and align transaction details more effectively,” Mr Katz said.
Retailer Adam Drexler, founder of homewares chain Matt Blatt, revealed that he reduced the frequency of chargebacks he suffered by using a number of tactics, including requests for photo ID and nominal payments.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.