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.”
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.