In response to the general consensus that broad EMV (Europay, MasterCard and Visa) adoption in the United States will lead to increased crime associated with e-commerce transactions, many payment enterprises are looking for solutions. Two such companies took a preemptive strike against card not present (CNP) fraud. Total System Services Inc. (TSYS), a global acquirer based in Columbus, Ga., disclosed Feb. 25, 2016, that it had teamed with Toronto-based technology services company Ethoca Ltd. to create a new level of protection for e-commerce transactions.
"With the continued growth of e-commerce payments and the anticipated rise in card-not-present fraud, efficient collaboration between issuing banks and merchants is crucial to help mitigate risk and improve the cardholder experience," said Andrew Mathieson, group executive at TSYS. "The TSYS Transaction Recovery Network enables a collaborative efficiency that reduces online fraud and operational expenses associated with chargebacks."
The chargeback mitigation solution launched through the agreement introduces the TSYS Transaction Recovery Network, powered by Ethoca, designed to stop CNP fraud, recover lost revenue and eliminate chargebacks. The new platform will enable TSYS to automatically deliver confirmed fraud data from the issuer to Ethoca in near real time. In response, Ethoca will then pass confirmed cases of card fraud across a large, global merchant network to recover funds via transaction reversal or refund, negating the need for an issuer to initiate a chargeback procedure. The process will enable issuers and merchants to stop fraud at the source, saving time and costs, the companies stated.
Market Research firm eMarketer estimates e-commerce sales will exceed $3.5 trillion annually within the next five years. Following are four countries the company cited as top e-commerce regions with year-over-year growth, according to a recent article in Internet Retailer: China, $672.01 billion (42.1 percent); United States, $349.06 billion (14.2 percent); United Kingdom, $99.39 billion (14.5%); Japan, $89.55 billion (14.0%)
Trevor Clarke, Executive Vice President of Issuer Relations at Ethoca, noted that Aite Group LLC predicts CNP losses will reach $6.4 billion by 2018. The consulting firm attributes the increase to the post-EMV shift in fraud from card present to card-not-present channels. "With TSYS' Transaction Recovery Network, collaboration between card issuers and merchants will now be available to TSYS card issuers worldwide," Clarke said. "Through this initiative, we're executing on a shared vision: helping card issuers find more efficient and cardholder-friendly ways to combat the costly, damaging effects of fraud and chargebacks."
Ethoca, established in 2005, has broadly deployed collaboration-based technology to merchants and issuers in five continents using what is reportedly the largest collaboration network of its kind. Seven of the top 10 ecommerce brands, seven of the top 10 U.S. card issuers, two of the top five U.K. card issuers and more than 3,500 ecommerce businesses around the world rely on Ethoca solutions, the company reported.
The company revealed that its issuer customers have successfully stopped an average of 65 percent of card-not-present fraud, with an 84 percent recovery rate among highly disputed merchants. It additionally noted a 75 percent recovery rate of low-value transactions that would otherwise be written off, and up to 40 percent recovery of 3D Secure transactions.
The TSYS Transaction Recovery Network is available on select platforms for consumer and commercial payment card issuers worldwide. TSYS and Ethoca expect card issuers, ecommerce merchants and online businesses to leverage available and actionable fraud intelligence and card acceptance insights made possible through this unique platform and capability. The companies expect widespread adoption to spur revenue growth and further protect payment security infrastructure.
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