Category: Blog

With the dramatic increase in fraud over the past few years, more and more merchants are dealing with chargeback fraud. 

When handling a chargeback dispute, it’s important to know the nuances of the entire chargeback process. In this article, we’ll dive into the key aspects of a chargeback claim and how you can reduce your chargeback ratio.  

What are Chargebacks?  

A chargeback is when the cardholder’s chargeback claim is processed by the issuing bank, and the cardholder is granted a provisional credit in the interim of the dispute. A common chargeback type is when a cardholder or business sees suspicious activity on their credit card. They can then directly dispute the transaction with their credit card issuer. 

For merchants, chargebacks can cause havoc in understanding your cash flow. Hospitality businesses, especially hotels and lodging, often encounter chargebacks since they have often already provided services and may have even turned cardholders away.   

In addition, processing banks scrutinize merchants who have a high number of chargebacks. For all businesses, it’s critical to keep chargebacks to a minimum.   

At the same time, many cybercriminals use the chargeback process to commit fraud.   

Here are two types of chargeback fraud:  

1. Friendly fraud — When a cardholder claims the product wasn’t as described, they canceled a reservation, or the charge is related to suspected fraud. Sometimes these complaints are valid, but fraudsters can use chargebacks to get refunds after services are rendered to get free items.  

2. Criminal fraud — When a reservation or service is used with stolen card details.  

Sometimes, a merchant error can also result in a disputed charge. For example, when a refund or cancellation policies aren’t disclosed, or when the hotel marketing didn’t match reality. Essentially, an error or miscommunication on the merchant’s part instigated the cardholder chargeback.  

How do chargebacks work? 

The chargeback process is a tedious one, but it does include an opportunity for a business to handle the disputed charge.   

In short, here’s how it works:  

1. The cardholder submits a chargeback request to their bank.  

2. The card issuer reviews the request.  

3. The card issuer forwards the request to the merchant’s processing bank.  

4. The merchant’s bank account is debited for the chargeback amount.   

5. The merchant can accept or rebuttal the dispute.  

6. The original card issuer reviews the merchant’s case.   

7. The card issuer determines the outcome, and in accordance to card brand policies, will provide a provisional credit back to the merchant.   

This entire process, from the request to case closed, can take up to three or four weeks. The cardholder can request a chargeback up to 120 days after purchase, and sometimes they are given a full year with continuing service agreement. Meaning many merchants may need to argue chargeback requests months after the initial transaction.  

When defending a transaction, a merchant only has ten days to submit compelling evidence. 

But what happens if the case results in the cardholder’s favor?  

If the cardholder continues to dispute the transaction with their card issuer, the merchant may elect to review the chargeback case by arbitration with the card brand. If during arbitration the case is decided in the cardholder’s favor, the merchant will be assessed a fee by the card brand arbitration committee.   

What causes chargebacks?  

There are many reasons why a cardholder might request a chargeback. Some reasons include:  

• A fraudulent transaction was made with a stolen card  
• Intentional chargeback fraud  
• Misleading service descriptions  
• Duplicate payment or the wrong amount  
• No cardholder authorization 

Interested in learning more about how chargebacks can affect your industry? Consider downloading the Fortis chargeback guide. 

The third blog in our Embedded Payments series discusses features to look out for, as well as a deeper dive into the Fortis Platform. In case you missed it, you can find the first blog and the second blog of the series at their respective links.

What Features Should You Look for in the Ideal Embedded Payment Solution?

While making payments easier and faster is a win-win for customers and businesses, there are several points to consider when choosing the right platform. Security is paramount in financial transactions because of the amount of sensitive data they contain. But you also want to think about what kind of platform will allow you to grow in the long term.

Some key features that both software providers and merchants will appreciate are:  

• Security – You want an embedded payments platform that invests in fraud protection and PCI DSS compliance. Ideally, they will do more than encrypt payment data—they will tokenize it for future use.  
   
• Customization – Every business has different needs, and its customers have unique payment expectations. Your solution should provide payment and front-end customization options for an on-brand experience.  

• Variety – There are several components your business may need for a seamless payment experience. Some features around integrated payment software should include are customer portals, payment facilitation, text-to-pay support, card account updater, and EMV Card Present transactions.  
   
• Visibility – You’ll want a program that keeps track of invoices and scheduled reports for a clean auditing process.   
   
• Sound APIs – The payment API is the cornerstone of your embedded payment solution. Your chosen API should be easy to implement and well-developed, with plenty of technical specs you or your IT team can look through, depending if you are a software developer or a merchant.  

The Embedded Payment Solution You’re Looking For 

When it comes down to it, you want a payment platform that makes sense for your industry, integrates with your ERP or software that runs your business, and provides a seamless payment experience. 

Fortis has an easy and robust embedded payment solution that provides everything you need to optimize your payment process and grow your business. For more on how our expert team can help your service providers and merchants accept more payments securely and scale, contact us today to get started.  

In our last piece, we talked about Embedded Payments and how they work. In this blog, we discuss the ideal audience for Embedded Payments and the respective benefits of using this solution. 

Who Uses Embedded Payments? 

In all likelihood you’ve already used an embedded payment system. Any application or website that keeps you on its site for the entire checkout process is probably using an embedded payment processing gateway. 

Some examples you are sure to recognize are:  

• Uber  
• Amazon 
• Starbucks 
• Tesla 
• Walmart 

And the list is only growing. In the last year, Fortis experienced an 80% growth rate–in part because of the high demand for embedded service solutions from businesses, software providers, and ERP solutions.  

The reason why integrated payments are so popular? It boils down to a few different benefits.  

What Are the Benefits of Embedded Payments? 

There are several reasons to invest in an integrated payment solution—whether you are providing software solutions, allowing customized ERP access, or you’re a merchant looking to grow.  

Here are five distinct benefits: 

1. Customer retention – When purchasing a product is secure and easy, without all the hassles of redirects and one-time passwords or codes, customers are more likely to return. This translates into boosted customer lifetime value.  
    

2. Seamless experience – An improved experience is at the core of embedded payment solutions. Providing an end-to-end, simple payment process makes it easy for customers to say “yes.” 
    

3. More control over the front end – An embedded payment solution isn’t just about keeping everything on-site. The best-in-class providers offer a seamless, front-end check-out experience for the end user that is close to invisible.
    

4. Cross and upselling opportunities – When you use an integrated commerce solution, you have more chances to offer cross-sells and upsells to customers already in the process of checking out. Thus, improving your product awareness and potentially growing revenue.  
    

5. Fewer risks – Since the payment facilitator takes care of payment authorizations, fraud detection, and security, the merchant or service provider can minimize risks without sacrificing quality.  

Overall, these five primary benefits lead to generating more income.

When you make it easier for consumers to buy, then more customers return, and you have a recipe for increased revenue. And once it’s in place, you don’t need to put much work into maintenance—your embedded payments platform will do that for you.  

To learn more about the Fortis Platform’s Embedded Payments solution and to explore partnership with us, visit our website. 

Over the past decade, financial technology has continued to evolve to meet the needs of customers and merchants alike. With embedded finance, sometimes called integrated commerce, and in particular, embedded payment technology, merchants and software providers can take another step toward seamless customer experience and improved retention. 

All while boosting their bottom line. 

Within the next decade, embedded commerce solutions are expected to generate $7 trillion in value.  

Out of all the embedded commerce software solutions, payments are the most in demand. Around 83% of businesses want to offer integrated payment solutions within the next five years. 

While there are several types of integrated commerce solutions, such as embedded lending and embedded banking, we’ll focus primarily on payment innovations in this article, and how merchants and software providers can leverage payment technology.   

What Are Embedded Payments?

Embedded payments make the process of “paying” close to invisible, allowing customers to make purchases with just a few clicks, and in some cases, no clicks at all. It replaces tedious form-fills and several redirections, and instead, reconciles the transaction all the way back to the merchant in an automated fashion.  

There are generally only a few steps involved: 

• A business embeds the payment facilitator’s payment processing technology into their website or application.  
• The customer shops for a product and makes a purchase decision or enjoys the seller’s service.
• The payment facilitator receives the amount owed from the software application via a trigger, automatically.
• The buyer provides their payment details the first time they visit a seller, and on future transactions (or using a wallet, like ApplePay), just authenticate their credentials.
• The payment facilitator handles payment authorization, security, fraud detection, and deducts the funds from the card holder.
• The payment facilitator then syncs the payment data with the business’ general ledger in the POS/ERP or Accounting Software.

How Do They Work?

For example, let’s say your customer wants to make a purchase online. You offer a “pay now” button or payment portal that allows your customer to use whichever payment method they prefer—ACH, bank-to-bank transfer, credit cards, and so on. They can even break up the purchase into smaller payments. 

From adding the item to the cart, to the final payment, your customer never leaves the application, and every step is taken on that platform itself. 

This uninterrupted process defines the usability of embedded payment systems.  

And this financial tool offers a seamless, almost invisible, customer experience while boosting revenue and cashflow for the business by making selling easier, collection of funds faster, and reconciliation simpler. And, this is all while delighting the buyer with a seamless experience. 

To learn more about the Fortis Platform’s Embedded Payments solution and to explore partnership with us, visit our website.