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Education

Because, unlike fraud costs, this is a voluntary part of the budget; it's here and those losses are often invis-
where many business owners try to cut costs or neglect to scale up as their ible until months after the actual
businesses grow, resulting in many fraud prevention teams working with sale took place. This is because
insufficient resources. But the importance of training and development of the "lag" time between when
cannot be overstated – fraudsters are constantly changing their tactics and a transaction is made and when
improving their technologies, so your staff always need to be learning to the merchant is notified that it
stay ahead of the curve and keep your business secure. has been reversed. To account for
chargeback lag, budget for poten-
Third-party services tial future losses. Remember, for
Once you've calculated projected training and development expenses, do every dollar lost your likely cost
some cost comparisons. Third-party fraud management tools range from will be $2.40. For example, if your
simple organizational aids to complete, full-coverage fraud prevention profits in January were $100,000,
services. Depending on the size and security needs of your business, you but 1 percent of those transactions
may find outsourcing to be more affordable than building an in-house team. by value were charged back, your
Most businesses use some combination of in-house and outsourced fraud losses will be:
prevention. For example, manual transaction reviews require significant $100,000 x 1% x 2.4 = $2,400
man-hours to perform, so you may choose to use a third-party service to
review flagged transactions, while performing the rest of fraud management After chargebacks, your month-
in-house. Transaction volumes will have a significant effect on whether in- ly profits in January were only
house or third-party manual reviews will be more cost-effective. $97,600. But you don't actually

Chargeback lag know that until April. So it's im-
portant to allow for retroactive
In theory, fraud costs, training and development, and third-party services chargeback losses in your fraud
should make up your total fraud budget – but there is one complication. budget to ensure that you don't
Chargeback lag introduces an element of uncertainty. Chargeback loss and spend money you don't have.
management is responsible for nearly 50 percent of total fraud-related costs,
Invest now, save later
Taken all together, this should add up
Let Be Your EMV Expert! to somewhere between 13 and 20 per-
cent of your total operational budget.
Remember, cutting corners in your
Your EMV Eco-System Made Affordable! fraud budget may save you a buck

eProcessing Network has the secure, payment solutions to help you stay current with the right now, but will ultimately result
technologies that keep your merchants connected. And with real-time EMV capabilities, in more money lost to fraud. Finally,
retailers can not only process contact and contactless payments, Apple Pay and Android Pay, fraud loss as a percentage of revenue
they’re able to manage their inventory as well as balance their books via QuickBooks Online. has grown every year since 2013 –
and there's no reason to think it will
stop now – so be generous with your
fraud budget. The last thing you want
at your year-end is a nasty surprise in
the losses column.
is EMV-Certified
A pioneer in data analytics and industry-spe-
cific risk management, Suresh Dakshina is the
President of Chargeback Gurus. He is a certified
ecommerce fraud prevention specialist and a
Certified Payments Professional who knows
firsthand the challenges business owners face,
especially when it comes to chargebacks and
fraud. Suresh holds a Master's degree from
University of Southern California and has con-
sulted Fortune 5000 companies for over a
decade on chargeback and fraud minimiza-
tion. He is a veteran speaker and works closely
with card networks such as Visa and American
1(800) 296-4810 Express on chargeback process optimization
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