Online Credit Card Declines are Crushing Retailers – The Cause is not what you Think

Online Credit Card Declines are Crushing Retailers – The Cause is not what you Think

Over $40 billion of credit card declines happened in 2013 and it was not because of a lack of funds on behalf of the purchaser. According to TrustInsight, it was unnecessary red flags banks put on transactions by banks. With no consumer authentication solution at the point of transaction, most banks will error on the side of caution and decline the transaction if there is “digital anonymity” surrounding the payment card information. How does a customer respond when they attempt to make a purchase online and they are denied because the merchant and/or merchant bank has no way to verify online identity? They get ticked and find another retailer. A lack of consumer authentication is going to greatly hinder sales for omnichannel retailers.

Lack of Consumer Authentication Causes Chargebacks = Migraine

For obvious reasons of maintaining your sanity, it is best for you not to get involved with chargebacks. Chargebacks happen for any number of reasons, but the main issue causing chargebacks is fraud. However, you cannot declare a charge fraudulent until an in-depth investigation takes place. Banks freeze funds until they make the appropriate designation on the transaction. Below are a few of the migraine-causing issues created from chargebacks:

  • Losing merchandise that has already been sold
  • Payment Processing Fees,
  • Fines for chargeback penalty, or even
  • Possible commissions for currency conversions
  • Banks Will Hold Funds Up to 90 days to cover fraud
  • Potential Account designation of Risky, which will flag your business for all future online transactions

Merchant accounts receiving too many chargebacks can be labeled by credit card companies as fraudulent, which directly impacts your omnichannel environment of payment acceptance. Banks are responsible for fraudulent transactions with the 2015 EMV adoption by retailers across the United States; however, they have many safeguards in place to make sure that they don’t have to “eat” the lost monies caused by fraudulent transactions. So, retailers must find a solution to authenticate a consumer at the point of transaction. Consumer Authentication dramatically reduces the odds of fraud and the hassle of dealing with chargebacks.

Safe Transactions = Happy Customers

Bottom line, all consumers want to take advantage of omnichannel processing, but they want to know it is secure. With so many competing solutions, it is mandatory businesses get their data security right the first time. Target can explain what lost customer confidence has done to their bottom line. Requiring consumer authentication at the point of transaction guarantees a negligible amount of fraud and guarantees businesses higher transaction scores & lower interest rates. Authentication solutions must meet all payment card requirements on uptime in order to not be declined by a processor. The speed of the authentication is, generally, unnoticed by the human eye.

Consumer Authentication is Smart Business

Creating a secure and more efficient payment transaction wins on so many levels. First of all, forcing your consumers to authenticate at the point of transaction creates no real time constraints, plus it gives your consumers the satisfaction that their payment data is being properly protected. But, the most important piece to the puzzle is fraud reduction. Card Not Present (eCommerce, mobile, etc) fraud last year in Europe, alone, cost retailers $2 Billion and all of that fraud was pulled off on the impenetrable EMV card. Authenticating at the point of tranasaction has numerous rewards.

  • Increase your Payment Acceptance Score
  • Monitor and approve transactions from your phone
  • Card Not Present Transactions Become Safe
  • Place all Transaction responsibility on the backing back
  • 2 Factor Security
  • Eliminate the Possibility for Fraud & The Chargeback Nightmare

Why Cloud Tokenization and Consumer Authentication Are Best Friends

Once your transaction is authenticated, the next secure step to take is to tokenize the transaction. Tokenizing the transaction after authentication creates no real time constraint on the transaction, itself. It falls in line with processor and gateway uptimes. Tokenizing after authentication immediately removes the payment data from your environment, reducing your PCI compliance/scope. The happy dance moment is if the data is ever breached, there is no information for the cyber thieves to recover.

Consumers demand secure processing environments. The adoption of EMV will demand the need to authenticate transactions when the card is not present. Creating a line of defense for your customers at the point of transaction reduces your PCI compliance, but most of all it guarantees that when you are breached, that no sensitive data is compromised. You sleep easy and your customers feel safe. Find out more about TokenEx at Follow us on Twitter and LinkedIn.

Topic(s): payments , tokenization

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