ACI Report Reveals the Causes of 2015 Holiday Fraud Spikes

Feb 29, 2016

With the 2015 Holiday season behind us, payments processor ACI Worldwide collected the data to analyze the percentage of fraudulent transactions that took place during the bustle of holiday shopping. According to their data, in-store pick up was responsible for fraud spikes. However, this was accompanied by a growth of e-commerce transactions that outpaced the number of overall fraudulent transactions.

In fact, of the hundreds of millions of transactions that took place during the 2014 and 2015 holiday seasons, online transactions grew from 21 percent from last year while fraud grew 8 percent. ACI’s report also revealed that fraud attempt rates spiked to their highest on Christmas Eve (2.4 percent). Other spikes included Thanksgiving (2 percent), Black Friday (1.8 percent) and all holiday-shipment cutoff days (1.6 percent).

According to ACI, “It saw two trends that could have driven spikes on Christmas Eve: the popularity of electronic gift cards as a last-minute gift and an increase in the ability to buy online and pick up in-store”.

It would seem that electronic gift cards were a big favorite for fraudsters, with the highest fraud attempt rate of any product sold by merchants. In addition, online/pickup in-store had the highest fraud attempt rate of any delivery method. While these targets were anticipated, the fraud numbers related to in-store pick up were not – they exceeded all expectations. In November, the expected increase was 28 percent for fraud attempts for online/in-store pick up transactions. In reality, the fraud attempt on this delivery method increased by 47 percent.

With the shift to EMV cards still underway in the U.S., e-commerce merchants and customers are at an ever-increasing risk. While card-present transactions will be more secure, card-not-present transactions are experiencing an increase in fraud. For e-commerce merchants concerned about this growing threat, securing payment processing services through a provider that will help protect their business and its customers is absolutely crucial. But not all providers are willing to work with high chargeback rates and high risk industries.

With a high risk specialist – like EMB – even the most “high risk” businesses can secure a high risk merchant account. The advantage is that merchants can arm themselves and protect their customers by becoming more proactive in the chargeback process. EMB’s Chargeback Shield program notifies a merchant immediately when a chargeback occurs. In fact, this program has reduced the frequency of chargebacks by 15-30%. To learn more about what a high risk merchant account can do for you, contact today.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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