Today's Payment Service Provider (PSP) should be chosen due to several distinguishing factors. The first is reliability. Let's face it – profits are the main concern of all merchants, and he who handles those profits should have extensive experience, as well as a reputable history of financial expertise and punctual payments.
The second should be the technological superiority that would give merchant accounts all of the latest features and benefits, as well as being connected with a multi-banking solution for back-up and full payment method, as well as currency flexibility and diversity.
The third is perhaps the most important, yet is often overlooked. Fraud prevention – not to be confused or compromised with fraud detection.
Merchant concern about online fraud and chargebacks has significantly increased as fraudsters become more sophisticated and scheming. Of course, as e-commerce continues to flourish and prosper, the number of instances of fraud and chargebacks will continue to mount. A chargeback is the word that online merchants despise the most, as it is not only the loss of their product or service but also a recipe for heavy fines, account closure, and even black-listing. Fraud prevention differs from fraud detection as the merchant finds that his profits have been maximized as a result of the cost-effectiveness of intelligent and sophisticated risk management. In other words, recognizing fraudulent activity is not enough – it needs to be stopped and if it comes down to it, represented effectively by the payment provider who should invest all efforts to “fight back” the charged amount from the acquiring bank on behalf of the merchant.
Maximum fraud prevention means being equipped with the detection and screening tools to ensure maximum protection with minimum rejection rate. A trained risk manager with a wide array of experience should also be dedicated to your account, as professional human judgment should always be intertwined with even the most superior technological system. The combination of the two ensures that all transactions that will lead to profit are approved and those that will lead to fraud, loss, and fines should be recognized and declined. The old and outdated “scrubbing” system does not work – too many potential valid sales are lost and approval ratios suffer. Only the combination of superior technology and the proficient risk team can bring the kind of success that ensures maximum conversion rates with minimal fraud.
Protecting merchants another step further, the payment processor should be PCI compliant and capable of credit card storage. This means that the database of customer card information is stored with the processor, who has ultimate security and is at no risk of hackers and thieves who want to use and abuse personal data. This not only relieves the merchant of the burden of storing classified information, but protects the core of their business.
Providing the feature of a "dynamic descriptor" is essential as well, as it serves as an additional customer's authentication tool for the merchant. The descriptor is the identifying name on the end-user’s credit card statement, which as it can now be “dynamic,” can change to the merchant’s discretion. For example, it should be able to change per member, group, time, type of product, member type, number of sub-payments for one purchase, or however the merchant sees fit. This verifies the customers before shipping out the products and also verifies to the merchant that the end-user has access to his bank account to view the descriptor as appeared on the end-user's statement. Through accurate authentication of the customer the risk of potential chargebacks is minimized, in some cases even prevented.
Fraud prevention should be a main concern for the PCI certified PSP and choosing your PSP should be based on their ability to do so. Thanks to technological advancements and intensive studies on fraudulent trends, today's merchant does not have to be victimized by internet theft. They just have to be protected by the right PSP.
Avishag is the Marcom Manager for SafeCharge, a payment service provider integrating secure merchant accounts with the most powerful fraud prevention solution. She can be reached at avishag@safecharge.com
