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As online shopping continues to stitch itself into consumer behavior, efforts to reduce chargebacks also advance. The latest is Riskified’s Auth Rate Enhance service that can pre-screen orders and provide more information for its customers to make a go-no-go decision on digital orders.
Auth Rate Enhance, a component of Riskified’s Chargeback Guarantee product, can help give issuers more information about a potential transaction. That can help because, according to Riskified data, approximately 15% of e-commerce orders fail because of card issuers declining to authorize payment. Its data also shows that as many as 70% of these declined transactions may have been from legitimate customers who appeared too risky.
False declines have long been an issue for online retailers, but during the pandemic it was a particularly notable issue because of the volume of new online shoppers, who had not shopped online or adopted new shopping patterns. Myriad factors are fueling the growth of false declines, such as the explosion in e-commerce since the onset of the pandemic, merchants’ increasing reliance on automated fraud-detection systems, and the subsequent decrease in manual reviews of suspect transactions. There’s also a desire among some merchants to achieve zero fraud, which leads to ever-tightening fraud-prevention rules, payments experts say.
“Overly low authorization rates can choke conversion rates, in turn stunting e-commerce growth,” New York City-based Riskified says. U.S. e-commerce sales, according to the U.S. Census Bureau, accounted for 15.6% of all retail sales in the 2023 fourth quarter, up 0.8 percentage points from the prior quarter.
In related news, Plano, Texas-based Chargeback Gurus says its platform is compliant with PCI DSS 4.0, a data standard set by the PCI Security Standards Council. Version 4.0 will be the sole active version beginning March 31, 2024. Validation of compliance to the standard, which replaces version 3.2.1, is required by March 31, 2025.
Achieving compliance will give Chargeback Gurus confidence that its data and its customer’s sensitive information is being handled with care and respect, Damo Sampathkumar, Chargeback Gurus chief product officer, says in a statement.
