How the right data can help you prevent fraud—and reduce false declines and chargebacks

Data is now collected seemingly everywhere and all the time, helping businesses make smarter, faster and more informed decisions. But while having mountains of data is a great thing in theory, its true value comes from the insights that can be gleaned from it. After all, without useful insights, data is sort of like cat videos—fun to watch but of little value.

Research shows that organizations still struggle to manage their data and gain insights from it. Ninety-seven percent of organizations’ leaders believe they’ve missed out on valuable opportunities due to poor data management, according to a Veritas report. 

For fraud prevention, and ultimately chargeback prevention, it’s critical that merchants have the right data at their fingertips. With so much transaction and fraud data now available, how do you sift through it, make sense of it all and turn it into actionable information? Hint: You need the right tools to analyze it, present it in a clear way and understand what it means.

Why merchants can’t be nonchalant about fraud

Merchants might be tempted to think they don’t need a data-strategy in place to help reduce fraud. But that’s a mistake, as fraud is a fast-growing reality in the world today:

• Global losses due to payment card fraud were expected to reach nearly $400 billion over the next decade, up from just $32 billion in 2021, according to the Nilson Report.
• Chargebacks were estimated to reach a volume of 252 million worldwide in 2022, according to a  survey by the Aite-Novarica group.

Given the soaring growth of fraud losses and chargebacks—which are also very costly to merchants—it’s worth taking steps to rein them in. What’s more, not only are they exceptionally costly to your bottom line, but they contribute to false declines. You don’t want to lose worthy customers because their cards are mistakenly declined, and Forter data shows that 40% of customers won’t buy from a merchant after their first false decline.

Being proactive about understanding where your fraud and false declines are coming from and then adjusting your card acceptance practices accordingly can unleash many positive benefits, while enhancing your customer experience. Making sure your acceptance strategies also reduce fraud, and minimize friction in the payments journey, starts with having clear insight into your fraud metrics as well as trends and benchmarks in the ecosystem.

Putting actionable insights at your fingertips

With the right tools, merchants can turn their own fraud data into real and actionable insights to make smarter decisions. And some good news: The right tools now exist.

Fraud Insights for Merchants is a powerful platform that provides a complete view of your business’s fraud, chargebacks and decline data across your entire Mastercard transaction portfolio. Among the types of insights it provides:

• Fraud: Get a detailed, yet clear breakdown of your fraud data by type (based on business identification number—BIN), region and country.
• Declines: See what’s causing declines by reason code, BIN, issuer country, value and volume.
• Chargebacks: Understand what’s causing chargebacks, including fraud vs. non-fraud, reason codes and BIN.

The platform presents your data in an interactive, yet easy-to-use dashboard format with charts and other visuals to make it simple to understand. There’s also the option to export transaction-level data so it can be used in other programs or reporting. 

Having consolidated data and insights in one simple platform offers many benefits to merchants including:

• Getting clear visibility into your fraud, declines and chargebacks data and seeing how that data corresponds to each other—so you can make more informed decisions about your card acceptance policies and how you tackle fraud and chargebacks.
• Minimizing risk by identifying new trends as they emerge and adjusting anti-fraud operations accordingly.
• Reducing shopper friction, while providing improved efficiency.
• Minimizing the impact of fraud and improper chargebacks on the bottom line. improper chargebacks on the bottom line

Why a multilayered approach is key

Having a complete yet easy-to-understand view of your fraud data is just one key step in your journey to reduce fraud, chargebacks and false declines. Merchants with the most success keeping fraud and chargebacks at bay take a multilayered approach and fight them every step of the way—including using  collaborative tools like Ethoca Alerts to find out about disputes in real-time before they turn into chargebacks. Ethoca Consumer Clarity is another valuable tool, providing consumers with clarity into their transactions in their digital banking channels to prevent disputes in the first place.

Fraud comes in many varieties, so how you fight it needs to as well.