During the holiday season, gift cards are chosen by many people for their family and co-workers. You can purchase, send and redeem electronic gift cards more easily than traditional plastic gift cards. These cards are becoming more and more popular on mobile devices.
However, it can be more challenging to detect fraud on e-gift cards. To avoid a January chargeback hangover, you should be prepared for a large amount of e-gift card orders in November and December and be able to identify and prevent fraud.
Based on data provided by Giftcards.com, electronic digital gift cards are growing 29% per year, thus turning into the fastest-growing sector of the gift card industry. According to CEB/Tower Group, they were expected to count for 7% of the overall gift-card market by the end of 2016.
Electronic digital gift cards are equally popular with customers and fraudsters. They can be used instantly without the need of a shipping address. These cards can be transferred to others without difficulty. They can easily be monetized due to the demand for them in the secondary market.
More than 97% of top retailers and restaurants are selling their gift cards online. No company can fully be protected against online gift card fraud. It is critical for merchants to turn to a reputable payment processor like emerchantbroker.com. EMB is voted the #1 high risk processor in the US and boasts an A+ rating with the Better Business Bureau. EMB is rated A by Card Payment Options and is one of Inc. 500’s Fastest Growing Companies of 2016. With EMB, you can enjoy exceptional chargeback protection and prevention.
According to one of the payment processors, given hundreds of millions of payment transactions, electronic gift cards count for the highest fraud attempt rates of all products sold by their merchants.
During the period between Black Friday and Christmas in 2015, downloadable electronic gift cards brought about 9.5% of all online fraud attempts. A great number of holiday orders appear to be risky because the shipping address doesn’t match the billing address more often than it was normal. In this case, you deal with the greatest risk associated with the cancellation of a legitimate order, which leads to a lost sale and unhappy customer.