In today’s highly competitive cross-border commercial operations, every single occurrence of a fraud diminishes a merchant’s revenue and margin.
Statista estimates that e-commerce losses due to online payment fraud amounted to USD41 billion globally in 2022, up from the previous year. And this figure is expected to grow further to 48 billion U.S. dollars by 2023, with up to 40% of online retailers around the world facing chargebacks due to fraud.
Research conducted by Signifyd indicates that in 2023, the total cost of fraudulent incidents incurred by ecommerce merchants would be estimated at USD206.8 billion; meaning that every fraudulent order worth USD100 would cost the affected ecommerce merchant USD207 in tangible losses. Also, in trying to pre-empt fraudulent orders, merchants become more conservative in adopting stringent measures that decline transactions which are in fact genuine. Based on Signifyd’s analysis of the transaction volumes processed without the aid of any tool, 73% of the declined transactions were legitimate ones that could have led to conversion.
So, as far as cross-border commerce is concerned, if chargebacks are deemed as tidal waves by the merchant, then chargebacks due to fraud are the undercurrents that slowly but surely erode the merchant’s revenue and a primary cause of customer dissatisfaction, resulting in decreasing customer loyalty.
Globally, more than one billion credit card transactions are processed daily, and every single transaction must be authorized by a bank. A transaction that has been declined would result in a lost revenue opportunity for the merchant and an unpleasant payment experience for the consumer. Also, new consumers would be made to feel unwelcome while returning consumers might switch to other shopping sites.
Network Token – Enhance Authorization Rate
A service provided by the card scheme, information like the card number and other pertinent details are encrypted via tokenization, minimizing the frequency of sensitive data being transmitted within the payment ecosystem.
In the absence of tokenization, the cardholder’s card number and personal details are exposed during the completion of a transaction, increasing the risk of these data being stolen. Network Token ensures that sensitive data are transmitted in encrypted format during the payment processing cycle.
With Network Token, when the consumer inputs their card details (PAN, CVV and expiry date) to submit a payment request, the Network Token Requestor (i.e. the merchant, PSP or an acquirer) would send a request to the card scheme for a one-time key to enable encryption of the cardholder’s data. A single—use cryptogram would then be transmitted to the card scheme for further processing of the payment request.
During this process, the combination of the unique merchant token and the one-time key would ensure that each transaction is unique and that the transaction details are transmitted securely within the payment ecosystem.
The Network Token service not only ensures the authenticity of the transaction, but also minimizes false chargebacks which in turn reduces lost order opportunities and increases conversion rate of legitimate transactions for the merchant. Visa reported that tokenization has, on average, reduced transaction fraud by 26% and increased authorization by 2.1%.
To counter the massive costs incurred by merchants due to fraudulent transactions, With increased transaction authorization, network tokenization has enabled merchants to recoup transactions worth trillions of dollars, alleviating the pain of massive operational costs due to fraudulent transactions. By subscribing to the network token service, the merchant can effectively minimize fraud and, at the same time, provide their consumers with a pleasant payment experience.
As a global digital payment solutions and service provider, Oceanpayment remains focused on every single transaction processed by their merchant. In our journey to provide a one-stop shop in digital payment and services, we have leveraged our suite of innovative products and technological capabilities to develop practical, applicable payment scenarios. Our smart risk management system, built on AI and Big Data, enables our merchants to detect and avoid up to 99% of known transaction risks, reducing chargebacks due to fraud. Also, with the upcoming launch of our network token service, we are extending our mission to protect our merchants globally.
粤公网安备 44030502003453号
Comments are closed.