False Declines Vs Actual Fraud During Holidays

Jan 17, 2017

Ecommerce merchants are putting all their efforts to protect their business from fraudulent payment processing. Often, eCommerce companies try too hard because of fear of fraud, which results in false declines. The latter is also called false positives and happens when a legitimate transaction is turned down.

False Declines

False declines are turning into a greater threat than actual fraud. US eCommerce merchants were expected to lose $8.6 billion in false declines in 2016, according to Business Insider. Merchants were expected to prevent $6.5 billion in fraud, which is $2 billion less than false declines. So it becomes more challenging for merchants to successfully fight fraud.

It is vitally important for merchants to turn to a reliable payment processing company like emerchantbroker.com for safe and secure payment processing. EMB is voted the #1 high risk processor in the US and has an A+ rating with the Better Business Bureau (BBB). EMB is one of Inc 500’s Fastest Growing Companies of 2016 and is rated A by Card Payment Options. EMB offers the best chargeback protection and prevention programs in the industry.

False Declines During Holidays

During the holidays, merchants get more worried about fraud. According to a privately held company that provides SaaS fraud and chargeback prevention technology, eCommerce merchants were expected to have a 13% higher holiday revenue in 2016 that would reach $78 billion.

The company reported the average order was estimated to have 55% likelihood of being fraudulent as compared to the other months of the year 2016. The average order value increased throughout the season starting from Black Friday ($178.68) and Cyber Monday ($165.04) to New Year’s Eve ($191.02). The fraud rates were estimated to go down 74, 70 and 69% as compared to an average day during the other months of the year 2016.

Based on the analysis provided by the company, the loss of revenue because of declined orders brings about more problems than the actual fraud. As merchants don’t have much time during the holidays to deal with a larger volume of orders, the company noted merchants would be less accurate about fraud. It was predicted that 60% of declined orders were legitimate on an average day. During the holiday season, the number was estimated to be 80%.

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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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