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Meanwhile, pundits are focusing on Chargebacks 911 estimates that friendly fraud will cost merchants upward of
being able to use Alexa to pay for $25 billion a year, and fraud costs the average merchant about 1.47 percent of
your fuel without having to get out their total revenue. For some merchants, this is unsustainable.
of the car. As far as I know, you still
have to step outside of the car to put Reservations about mobile wallets
the nozzle in the fuel filler to pump Finally, you have read a good deal about mobile payments, but probably not
the fuel. a lot about why smartphone users are not using mobile wallets. A survey
Burgeoning CNP chargebacks by Mercator Advisory Payments Insights showed that nearly 40 percent of
sma r t phone users see no benefit in using a mobile wallet. They see no
The second item I believe is not re- reason to change what they are doing now: inserting a chip card.
ceiving enough attention is the ava-
lanche of chargebacks and returns Beyond that, consumers have very real concerns about security issues associated
that ecommerce and card-not-pres- with using a mobile wallet. It will take a lot to convince them otherwise, because
ent merchants are facing. This has security, not ease of use, trumps everything else in the consumer's mind.
been fostered in no small part by the
regulations and policies of the card As we enter a new year, payment professionals, like our counterparts in the
brands, which have changed con- wine industry, would do well to focus on consumer behavior and what is
sumer behavior. At this point, after important to consumers. Technology for the sake of technology is not going
just a few years, returns seem to be to succeed. Sometimes this is harder to figure out than the next technological
a necessary part of ecommerce, and I breakthrough.
am not sure there is a solution.
Brandes Elitch, director of partner acquisition for CrossCheck Inc., has been a cash management
practitioner for several Fortune 500 companies, sold cash management services for major banks
UPS said on Jan. 2, 2020, that it expect- and served as a consultant to bankcard acquirers. A certified cash manager and accredited ACH
ed to process 1.9 million returns that
day. This is a 26 percent increase over professional, Brandes has a Master's in Business Administration from New York University and a
last year, and the seventh straight Juris Doctor from Santa Clara University. He can be reached at brandese@cross-check.com.
year of setting a new record. The
UPS study, called Pulse of the Online
Shopper, found that consumers make
purchases with returns in mind, and
the returns experience determines if
they will use that merchant again.
Another study, by the National Retail
Federation, showed that 55 percent of
online consumers plan to return or
exchange an unwanted gift within a
month of receiving it.

There may be no solution for this
phenomenon, but there are solutions
for the related chargebacks that are
occurring. LexisNexis found that a
merchant loses $3.13 for every dollar
in production value to chargebacks.
Many of these are due to what is
euphemistically known as friend-
ly fraud. The card brand rules are
stacked in favor of the consumer, and
the merchant is always on the defen-
sive.
Merchants lose the sale – and the
merchandise. They incur the ship-
ping cost. They have to manually re-
view the chargeback if they want to
dispute it, and they may have to pay
chargeback fees to the acquirer. This
is a disaster for affected merchants.

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