Blockchain Technology May Cut Down Cases of True Fraud

May 24, 2019

Though some believe blockchain technology can rescue businesses from chargebacks and ecommerce fraud, it may not completely solve the problem.

True and friendly fraud hurt all businesses, especially mobile and online merchants. Unauthorized use of credit cards triggers cardholders to implement chargebacks, resulting expensive refunds and other penalties for businesses. As blockchain technology evolves, merchants can expect it to reduce true fraud, such as cases where stolen credit card information, is used. However, it may not be as effective yet in fighting friendly fraud.

Blockchain Shows Promise in Curbing True Fraud

Blockchain records transactions across a large volume of computers through its public, decentralized, and distributed digital ledger. The beauty of blockchain is that the way it is created prevent the ledger from being altered retroactively. This may be beneficial in prevent in trimming cases of true fraud because it is tough to pull data from a blockchain system. Limiting e-commerce fraud could cut down on chargebacks.

To date, it’s not as promising for cases of friendly fraud, which is when a consumer initiates a chargeback though they actually bought the product or service they are asking for refunds. This type of fraud is especially troublesome and expensive for merchants. The nature of these cases are just difficult to get a hold on, mostly because shoppers claim they never received an item, said the purchase should have been cancelled, or a family member bought something without permission.

Though blockchain continues to evolve and nobody knows what it could bring forth, it doesn’t look like it can help those chargebacks caused by friendly fraud. No type of system can prevent a shopper from making false claims about purchases.

Ways to Prevent All Types of Fraud

From fraud prevention tools to chargeback mitigation alerts, merchants should use whatever they can to fight true and friendly fraud. Businesses should try doing the following to curb true fraud:

  • Use resources that can detect stolen credit card information
  • Implement the use of AVS or CVV to screen for stolen cards
  • Monitor cardholder and shipping addresses, rush orders, and multiple purchases of the same items
  • Verify addresses by calling or emailing shoppers

Again, friendly fraud is much harder to fight because they can’t be predicted. However, there are some actions merchants can take.

Create and promote a transparent, complete refund policy, which makes it easy for unsatisfied customers to get refunds. Refunds are much less expensive than chargebacks. Too many chargebacks can cost merchants their merchant accounts, which impacts their abilities to accept credit and debit cards.

Other actions they can take include:

  • Employing a fulfillment system
  • Having a friendly, informative team of customer service representatives
  • Tracking return shipments so that refunds can be issued promptly
  • Using clear transaction descriptors, which include business name, website, address, and phone number so consumers recognize purchases when they review their credit card statements
  • Refraining from making false or misleading marketing claims

In Conclusion

Blockchain technology alone isn’t the answer to fraud and chargebacks. However, it can be another tool that can help merchants against cases of true fraud. Every little bit helps.

Using some of the other tips here, as well as blockchain, can help merchants protect themselves best. As blockchain technology becomes more sophisticated and advances, there is a good chance it could grow into a stronger security tool for ecommerce.

Apply for a Blockchain Merchant Account

If you are a business interested in obtaining a blockchain merchant account, should contact eMerchantBroker.com. EMB works with all types of businesses, including those that accept blockchain technology. Apply online 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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