The real cost of chargebacks is far more than the original amount of the transaction. In fact, the LexisNexis 2016 True Cost of Fraud report shows that every fraudulent dollar costs businesses $2.40. Unfortunately, fraud is on the rise, and the average number of chargebacks has grown from 156 to 206 per month over the past year, making prevention a high priority for organizations that accept credit cards online. Small to medium enterprises (SME) are at particular risk, as they have fewer resources to invest in advanced security measures

Smart businesses have learned that the most effective method of preventing chargebacks is to take a multi-layered approach. Adding new payment technology to standard security measures makes it easier to identify risky transactions without the inconvenience of excessive false positives. For example, device ID fingerprinting and geolocation is now available on most mobile devices, offering new opportunities to verify identity at the point of sale without disrupting the transaction.


Begin With the Basics


These five strategies are the foundation of successful fraud deterrent programs in companies that accept direct debit payments:

  • Card verification
  • PIN/signature
  • Check verification
  • Browser malware
  • Address verification

Innovative Authentication Methods for E-Commerce


Any company that elects to accept credit cards runs the risk of processing a stolen card number. These advanced identity authentication methods work in conjunction with basic security measures:

  • Device ID fingerprinting
  • Geolocation
  • Authentication by quizzes
  • Customer profile database

Advanced Risk Assessment Creates Secure Business Payment Solutions


The final step in layering security measures is to assess each transaction for its level of risk without substantially delaying the payment process with high numbers of false positives.

  • Automated transaction scoring
  • Real-time transaction tracking
  • Transaction verification
  • Rules-based filters
  • Authentication of transaction by 3D tools

Though fraud is on the rise costing SMEs more each year, there are practical steps you can take to reduce your risk. Using a multi-layered approach that combines basic security with advanced authentication and accurate risk assessment, you can look forward to preventing a portion of the expense that comes with chargebacks. The return on investment goes beyond cost savings — a commitment to fraud prevention reflects well on your business in the eyes of your customers.

If you would like to learn more about how we can help reduce chargebacks in your e-commerce business at IntegraPay, feel free to contact us to learn more.