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research that fraud perpetrated via SecureBuy, along with eBay Inc.- survey also found that international
the online channel costs merchants owned payment gateway operator merchants contest chargebacks less
over three times the initial cost of Magento, discovered that 32 percent frequently than merchants in North
fraudulent purchases. One out of of all merchants surveyed do not America," the researchers added.
every four transactions are flagged apply automated pre-fraud screening
high risk and manually reviewed, technology prior to authorization of 3D in CNP
according to LexisNexis. Out of that CNP transactions, even as the manual SecureBuy and Magento said of
25 percent of transactions, 75 percent process costs them millions. additional concern is the lack of
are eventually accepted, while 7 terms and conditions (T's & C's)
percent find their way into the Furthermore, 26 percent of survey compliance among merchants. As a
dreaded false positive or "inadvertent respondents investigate only 5 percent or best practice recommendation, the
customer insult" categories. less of chargebacks, the report said. "The Federal Trade Commission said T's
& C's should be displayed within the
online check-out process. The report
noted that Visa Inc.'s card acceptance
guidelines state that T's & C's be
embedded into the checkout process.
However, no survey respondents
embed T's & C's within checkout.
The pie chart comprises merchants
who provide a check-box alternative
(63 percent) and merchants who
offer nothing (37 percent).
"History has proven that the only
effective ways to fight chargebacks
are to make sure that your terms
and conditions are clearly displayed
within the checkout and to obtain that
all-important customer signature,"
said Greg Wooten, Chief Executive
Officer at SecureBuy.
The traditional method of authorizing
purchases by capturing customer
signatures at the brick-and-mortar
POS becomes more complicated in the
online CNP realm, the researchers said.
But solutions are available.
The researchers highlighted the
Verified by Visa and MasterCard
SecureCode programs, which employ
3D Secure protocols to authenticate
consumers online. Wooten said
3D Secure allows cardholders to
authenticate themselves via issuing
banks, which foists all of the fraud
risk onto issuers and lets "the
merchant off the hook."
Wooten added that 3D Secure is
not only a "tried and true method
of proactively beating fraudsters
before they can do any damage"
but also a way for merchants to
achieve "considerable interchange
advantages."
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