Hello agents! Today we are covering a very important topic: fraudulent transactions and declining the wrong transactions. This post is going to include information that is important for you to know so that you can educate your merchants and work with them to develop solutions to protect their business and customers, while also making sure they don’t turn away legitimate customers.
What is a False Decline?
A false decline is when a customer’s payment method is flagged as fraudulent, despite being legitimate. This trend of incorrect flagging is only increasing as e-commerce becomes more popular. In 2019, false positives for fraud were expected to cost merchants $370 billion, and are expected to rise another 20% by the end of next year. As a comparison, actual fraudulent purchases were expected to cost merchants only $5.5 billion. While still quite large, this number is insignificant compared to the damage that would be caused by false positives.
As fraud continues to increase, merchants will be tempted to tighten their security. This decision, while preventing fraud to an extent, can result in a larger number of legitimate customers being turned away.
What are the Consequences?
When customers are turned away from merchants due to alleged fraud, some may switch to another payment method. However, up to 43% of purchasers who were flagged as fraudulent either reduced the amount of business they conducted with the merchant or even stopped purchasing from the company completely. Accidentally flagging a customer as fraudulent runs the risk of sending them to a competitor, severely weakening a merchant’s position within their industry.
While merchants need to be cautious that they don’t unnecessarily turn away customers, online fraud is expected to rise to 7% by 2022. Due to this, fraud is still an increasingly dangerous security risk that cannot be ignored either. The result is a sort of catch-22, where merchants can’t ignore fraud, but also run the risk of accusing well-meaning customers.
Is there a Solution?
There is no single, guaranteed solution to accepting transactions while perfectly catching fraud. That being said, there are certain measures that merchants can take according to the options that are provided to them by their processors or banks. These solutions range from manual review to computer programs that limit false positives. As an agent of FlashBanc, contact our partner support department to find out what options FlashBanc currently has available. Alternatively, you can refer your merchants to the client support department.
As always, FlashBanc is here to support you and your merchants. Speak with your sales director on how you can work with merchants on problems regarding processing their transactions, such as fraud. Helping them with such issues will make them more trusting and loyal, and as a result, more likely to continue using FlashBanc’s services as opposed to a competitor. If you have any questions, use any of the mentioned resources to find an answer to best prepare you to help your merchants and remember that FlashBanc is dedicated to your success.