CreditCardForum
has coined itself as the premier one-stop resource for consumers seeking in-depth information, opinions and advice on credit cards.
The
burden of online fraud liability initially falls on credit card issuers
to pay back consumers, but issuers increasingly pass the cost on to
etailers in the form of
chargebacks, per the bylaws of card acceptance agreements with the card networks – this is on top of the certain transaction
reversals. Online merchants
also stand the risk of losing products or services that have already
been sold, the fees incurred for payment processing, and even possible
currency conversion commissions.
In
order to recoup these costs, it is likely consumers will eventually
experience the cost of the liability shift back on them indirectly
through product price hikes, according to Woosley.
“The increase in CNP fraud is
an unintended, though predictable,
result of the extra security provided by EMV chip cards,” explained
Woolsey. “While the new technology is decreasing fraud transactions at
the point-of-sale, fraudsters are moving online where
chip security does not apply.
“Merchants
can try different authentication methods in the marketplace to mitigate
the increase in fraud, but they often present negatives to consumers or
the merchants themselves.”
An article on CreditCardForum details
ways online merchants can combat fraud. Potential solutions such as hosted payment gateways may have no
impact on consumers, but the cost to merchants is often greater than the cost of fraud. Fraud accounts for
less than one percent of merchants’ annual revenue, while they spend
more than seven percent combatting fraud.
Certain
networks like Visa do offer fee-based fraud prevention technologies in
exchange for liability protection for merchants who are willing to incur
that cost. However, 3D secure technologies also add an extra step in
the payment
for consumers, who may become annoyed at the friction.
“While
this tech seems to be a great solution, the cost to maintain it likely
is or will be passed on to consumers,” said Woolsey. “I think card
networks and issuing banks should require some additional
layer of protection to combat card-not-present fraud and shield
merchants from this increased liability and burden, as well as protect
consumers who may not notice fraud.
“Perhaps
card networks can implement some sort of chip reader that could work
with computer and mobile devices to employ the protections offered by
the embedded chip for online applications. Something
akin to the mobile wallets that use tokenization could also potentially
be integrated into ecommerce gateways to enhance online credit card
payment authentication.
“Until
solutions equally benefiting all parties are developed, someone has to
incur an extra cost, and it will be interesting to see how that will be
sorted out.”
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About CreditCardForum
CreditCardForum is the premier one-stop resource for and by consumers seeking in-depth information,
opinions and advice on credit cards that also allows for immediate comparison and application to preferred cards.
Since
2008, the site has been the leading online community dedicated to
consumer-driven education on the credit card industry. The
user-contributed forum is enhanced by a hosted blog that covers
latest industry developments that help consumers make more informed
decisions regarding their credit cards. It also serves as a repository
for key market data from multiple sources that provides a snapshot of
the industry, backed by experts in the financial
services and banking arena.
CreditCardForum
is the go-to site for thousands of credit-card users each week seeking
information and constructive peer-to-peer engagement with the aim of
strengthening their financial bottom
line.
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