Under the merchant agreement, sales you collected for the transaction being chargeback are taken from your business account and given back to the customer, once acquiring bank duly authorized a transaction is proven to be indeed a fraudulent use of credit card by a third person. You are certainly imposed to cover all the risks occurred.
Chargeback can be most costly for you to run the ecommerce since credit card transaction is a major payment method of online business.
Japan Consumer Credit Association shows that it will be expected surge in CNP (Card Not Presence) transitions.
Can not to collect payment
Can not to get product back
Become anxious to be chosen credit card payment method
Company A, a mail-order company, had introduced 3D secure as a measure to prevent fraudulent use. One day, a purchaser putted an item into a cart, and completed up to all the settlement procedures. Company A was relieved the transaction was due to via 3D secure. They re-calculated the order to get include a shipping fee, and got the authorization from card company again, but they did not go through 3D secure against because it was field in the manual.
Later, the settlement was made due to fraud use was noticed from the card company, and because it became a chargeback, the sales was all canceled. Company A told to the card company that the settlement went through the 3D secure, but because it was done re-authorization manually the second time, the authentication via 3D secure was counted as invalid. It became a chargeback after all; they lost the product and could not collect receivable. Company A had tried to prevent fraudulent, but was disappointed that it was not enough to prevent it in this case.
Company B, an apparel company, is running both online and over-the-counter sales. It is also possible that a purchaser receives over the counter what he shopped and completed settlement online.
One day, a purchaser completed settlement with his credit card online and came to the shop to receive the product he has bought. At that time, a store staff of Company B for sure to confirm this purchaser's information includes his name, phone number and the ordering number, and gave it to him. But later Company B was called for the transaction became a chargeback from the card company.
That because the credit card was used fraudulently by someone unknown, and card holder himself refused to pay. Company B explained the procedure that it has made a verbal confirmation, but because there was no documents can be official evidence, it was totally not observed.
Even the staff made a confirmation verbally and gave the product over the counter; Company B learned for the first time that they should have some actions such collation with the purchaser's information with public certificate and interim storage to manage defending themselves from chargeback.
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