Visa Aims to Combat Rising Chargebacks By Buying Verifi

Jul 15, 2019


Visa will buy the Los Angeles-based Verifi, which offers tools that help merchants, acquirers, and issuers to resolve chargebacks. This is especially impactful considering rising chargebacks in the industry.

Though the terms of the acquisition were not announced, Visa said it will integrate Verifi’s technology with the risk-management offerings from CyberSource and Cardinal Commerce. Visa acquired CyberSource in 2010 and Cardinal Commerce in 2017.

Concerns of Rising Chargebacks

In recent years, the payments industry has been plagued with rising chargebacks has cybercriminals have gotten more sophisticated.

A chargeback is a reversal of a credit card triggered by a cardholder returning merchandise or are dissatisfied with it. Also, there is friendly fraud. This type is more complicated because buyers ask for charge reversal but keep the merchandise. This is becoming a major problem, which is more difficult to prevent.

More than three-fourths of all chargebacks are due to friendly fraud. Additionally, every two years, losses from friendly fraud spike at a rate of 41%. In fact, the consulting firm, Aite Group, projects U.S. chargeback volume on payment cards will increase from $6.1 billion on 81 million transactions in 2018 to $8.6 billion on 115 million transactions in 2021.

Other Moves Visa Has Made to Protect Cardholders and Merchants

Last year, Visa responded to rising chargebacks by implementing a new program, Visa Claims Resolution. In addition to new reason codes for chargebacks and shorter timelines for cardholders, banks, and merchants to file and resolve disputes to chargebacks. The process becomes quicker and easier with Visa’s acquisition of Verifi.

Verifi’s technology provides near-real-time links to connect parties involved in a disputed transaction, with the aim of resolving the dispute before the transaction becomes a chargeback. Verifi claims more than 25,000 client accounts globally.

Visa believes that implementing Verifi’s technology to the card network’s risk-management solutions will provide greater collaboration and insights to chargeback dispute resolutions.

Steps to Take to Reduce Chargebacks

It is critical that all businesses take steps to prevent fraudulent purchases. Excessive chargebacks can cost you your merchant account, which impacts your ability to accept and process credit card payments. Once a merchant account provider terminates an account, it is very difficult to get a new one.

Chargeback insurance and chargeback mitigation programs are two good ways to protect businesses against fraud. Offering clear refund and return policies, as well as ensuring billing and shipping information matches, are some ways merchants can safeguard themselves.

In Conclusion

Rising chargebacks are problems that merchants must face head-on. Visa’s new acquisition shows that the problem is real and that it is looking for resolutions. Though Visa’s move is promising, merchants need to be vigilant and protect themselves whatever ways they can. Excessive chargebacks are too costly to be ignored. Merchants must be proactive.

Apply for Credit Card Processing

Merchants in need of credit card processing should turn to eMerchantBroker.com. EMB works with businesses in all industries and with various backgrounds. Additionally, it takes chargebacks seriously. It has partnered with a chargeback mitigation alert system, which can help resolve a number of disputes each month. 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.

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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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