As consumer buying habits change and move more on-line, it provides an ever increasing opportunity for fraudsters. With the increased volumes of transactions associated with Covid 19, it has been easier for fraudsters to hide in plain sight. The value of the average fraudulent transaction was up 70% in the 4th quarter of 2020, compared to a year ago. It’s not only the dollar amount of fraud that’s increasing, but how it’s happening. A combination of increasing value of attacks, the attacking of more channels, and a turn down in volume makes it more difficult to find the perpetrators. So, how are they doing it? Most of the fraud consisted of bad actors using fake identities to commit new account fraud and account takeover fraud. Account takeover fraud matters. Customers hold merchants responsible for accounts compromised and hesitate to do business with them in the future. However, in the same breath, they expect frictionless transactions. Merchants will need to rethink protecting against fraud throughout the entire customer journey. It could be worth spending more time in validating customers before a transaction. This gives a merchant more time to analyze fraud, compared to the split second decision making needed at checkout. Fraudsters are there, they are hoping you won’t notice. Take care to protect your business everywhere you can.
Merchants must continually find ways to attract customers by offering new and different payment methods. One method gaining in popularity is Buy Now Pay Later. Similar to the “lay away” model of old, BNPL offers customers flexibility in payments without added interest fees. This model allows customers to purchase online and then break down payments into installments. For millennials concerned about economic pressures and taking on more debt, this option has been welcomed. BNPL helps customers manage payments, while still getting the products and services they desire.
For merchants, BNPL still provides all revenue up front, with the added knowledge that the customer is good for the money. BNPL accounts are linked to the customer debit or credit card with services confirming eligibility. Some of the biggest players in this space are Klarna, Affirm and Afterpay. As a recurring merchant, you will start to see processors offering these services as part of the payments toolkit.
What started off as an alternative payment is anything but nowadays. Recurring billing merchants do well to implement PayPal as an offered method of payment for customers. With almost 300 million customers, we’ve seen use increase dramatically over the years. Recurring merchants can take advantage of PayPal’s ease of use and the feeling of security that PayPal offers.
And if you’re thinking of entering global markets, but not sure if you want to set up a foreign entity, PayPal could be a nice way to ease in. It will allow you to accept payments without having to set up every local payment method. With its broad reach, PayPal supports over a 100 different currencies.
Alternative methods of payments keep shifting and growing in this digital economy. While there might be hesitation on which to add and which to hold off on, PayPal continues to be a “must have”.
It looks like Discover is finally getting on board with the other major card brands for how they will measure merchants for the excessive chargeback program. In the past, they have evaluated dispute dollars over net sales within a month, with the limit being over 2%. Beginning October 13th, however, they will be monitoring chargeback transactions over net sales transactions within a month. Similar to Visa, the maximum limit for Discover will be 1% and 100 chargebacks.
Here’s the major difference – there will be no monitoring and workout period with Discover’s excessive dispute program. Each chargeback over the threshold will immediately incur a $25 fine. Be sure to know where you stand with your Discover disputes!
It has been just over a month since all Costco branded American Express cards transferred to Citibank’s Visa portfolio. The Costco cards accounted for about ten percent of all AMEX cards in the world, with most of those residing in the U.S. The impact of the AMEX Costco shift can already be felt by many.
In the past, we have seen major portfolio shifts – USAA, the ninth largest issuer in the U.S., recently switched from MasterCard to Visa, e.g. The AMEX Costco shift, however, is different. Since American Express cards operate separately from the Visa/MasterCard network, they don’t participate in the same Account Updater pool, usually relied upon by recurring merchants to help get new card information and retain their subscription customers.
PLC reviewed the impact to our clients, and it wasn’t pretty. The AMEX Costco cards became invalid on June 20th. In looking at the data, we can see that the declines in the last ten days of the month brought down the overall AMEX approval rates to the lowest in at least 18 months, averaging about 18% lower than previous approval rates:
As we evaluate July data, we are seeing continued decreases in approval rates, with many of our merchants having July include their first renewal event since the portfolio change, rather than June.
This is one case where the only means of retaining these customers is by old-fashioned customer contact. American Express did not identify a specified set of prefixes affected, nor did Costco allow these to participate in Account Updater, leaving merchants scrambling to reach out to their customers and request alternate methods of payment – much like recurring […]
As recently as a few weeks ago, we laid out predictions for payment trends in 2016 during a webinar with Subscription Insider. One of the key areas of concern we outlined for 2016 that continues to plague us is security and, unfortunately, it looks like our predictions are being realized quite early in 2016.
Data breaches come in many flavors and can include credit card data, health information, other personally identifiable information (PII), or more benign information including contact details. Once exposed, credit card data can be sold on the black market, or criminals can use other PII to steal identities and open new credit card accounts in the process.
The Data Breach:
This week, the media is buzzing with the news of the Department of Homeland Security and the FBI being hacked by political activists. The information compromised apparently contained directory listings of personnel, such as names, titles, email addresses, and phone numbers. While the data leaked may not be damaging immediately, it can open the way for spear-phishing tactics to further compromise the systems at these government agencies.
What You Need to Do Now:
As breaches and hacks continue, we can expect regulations for security and protection of all data to become more stringent. We should also be looking for new, improved methods of securing data – from credit cards to health information to personnel files. As an e-commerce company, it’s more important than ever to ensure your systems are PCI compliant or better, and that your security is as tight as it can be so you can avoid being the subject of the next headline. If you are unsure of your current status of compliance, contact your merchant processor immediately to get […]
Effective January 1, 2016, Visa has changed their fraud (also called the RIS) and chargeback monitoring programs. This may come as good news for some merchants who were worried about an increase in online fraud as EMV is rolled out across the U.S. The chargeback side of the fence is essentially the same for domestic chargebacks, but now international rules will match those that have been in existence in the U.S. for some time.
So what’s new? Merchants globally will enter the chargeback monitoring program if their ratio of chargebacks to sales reaches or exceeds one percent in a given month AND if the chargeback volume exceeds 100.
The fraud program has increased the allowable dollar amount threefold to $75,000 USD in fraud sales AND 1% ratio of fraud dollars to sales dollars within a month. The ratio has been reduced, but the allowed dollar volume increase is substantial.
Also, rumor has it that any merchant who entered the program in Q4 of 2015 will be forgiven and able to start fresh with the new program in 2016. Discuss this with your account manager at your merchant processor if applicable. And if you reached the thresholds in December, sit back with a sigh of relief and focus on January.
With only one week to go before the EMV liability shift takes effect on October 1, Visa has recently reported that only 18% of their 720M US cards have been reissued with the chip technology. That means 590M more cards will be reissued for Visa alone within the coming months. PLC’s clients have seen an increase in the volume of new expiration dates received by our merchants through account updater, to the tune of nearly double what they had been receiving the year prior. Considering only 18% of Visa’s portfolio has been reissued, the risk to recurring merchants of losing large amounts of their customer base due to involuntary churn is massive. On top of the incredible volume at risk, the old rules for updating expiration dates aren’t as effective these days. Issuers have been changing the month as well as the year on some of the new chip cards. The result – advancing the year on the expiration date before attempting an authorization is not as likely to be successful.
The key to retaining these customers is a multi-pronged approach, encapsulating all of the tools available to recurring merchants to help them crush the unnecessary churn.
In the first half of 2015, an astonishing 245,919,393 data records were compromised, either by being stolen or lost, according to a recent report by Gemalto. Of those, 161,577,865 were breached from either the healthcare or government industries. A full 80% of the incidents occurred in North America. The next largest geographical region was Europe, coming in at only 10%.
For CNP merchants, the type of breach plays a role in the ensuing processing headaches. With 53% of the breaches resulting in identity theft, merchants can expect to see either an increase in “potential fraud” declines upon authorization, or, as identity thieves are establishing credit cards in another’s name, they will eventually see a spike in “did not authorize” chargebacks.
Come join PLC and Subscription Insider this October, 22nd in Boston for a one-day event to help recurring billing merchants master payments processing. We will feature a keynote presentation by Paul Larsen, discussing the most current trends that are impacting your subscription business. The rest of the day will include panel discussions from industry leaders and case studies highlighting what you can – and must – be doing to reduce involuntary churn and increase lifetime value of your customers.
PLC Clients will receive a special rate.
To register for this event, visit Subscription Insider.