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STOPPING THE CHARGEBACKLASH

STRUCTURED DATA

By Gabe McGloin, Head of Intl. Merchant Sales @ Verifi

 

Brands have been encouraging consumers to move their shopping online for years. As a result of the COVID-19 pandemic, this has happened all at once. Even as lockdowns ease around the world, many stores and outdoor venues will remain closed or running at a reduced capacity. In the meantime, it’s easy to predict that commerce will remain digital-first – and in some cases digital-only – for some time to come.

As consumers spend record amounts on digital services and mobile apps, it’s important for merchants to be prepared for a substantial increase of payment disputes and chargebacks. Many businesses, especially smaller ones, are fighting for survival. Although they’re supported by the Government’s Job Retention Schemes and small business grants, cashflow and liquidity issues may still pose an existential threat for many.

Addressing a potential wave of chargebacks requires coordinated effort among the three main parties in the dispute: the merchant, the issuer, and the consumer. Clearer communication from merchants to consumers and more collaboration between issuers and merchants can pre-empt chargebacks and eliminate the burden of a formal dispute process.

 

Gabe McGloin

Expect the unexpected

As coronavirus has impacted the wider economy, plans have been changed, events cancelled, and destinations closed indefinitely. This has brought about a sudden and significant increase in disputes between merchants and consumers. Additionally, companies also need to beware the dangers of delayed chargebacks for products and services already sold and ‘accounted for’.

With up to 120 days to claim chargebacks on credit card purchases, consumers are cancelling experiences and gifts purchased months ago. Travel and hospitality have been hit heavily, as have subscription-based businesses deemed non-essential – such as gyms.

There’s also the real possibility of a second wave of chargebacks surfacing further down the line. Certain sectors, including online entertainment and gaming, have experienced a considerable boost during the early months of lockdown, but this uptick isn’t chargeback-proof. Typically, experience shows an increase in transactions is followed by an increase in disputes. Even sectors performing strongly now could face a ‘chargebacklash’ a few months from now as consumers reconsider purchases made during lockdown.

The foreseeable challenge for merchants could be a lack of resources to combat the spike in disputes. The necessary personnel to manage transaction inquiries, credits, and representments may not be available due to working from home, furlough, or layoff. You can also never be certain when the wave will hit, only compounding the issue.

 

A chargeback isn’t the end of the customer relationship

Once a dispute has led to a chargeback, businesses have limited freedom of action. They must comply, completing all processes and admin required. The best way to manage disputes, therefore, is to prevent them from escalating. However, this must never be at the cost of the customer relationship.

To maintain positive consumer relations under these circumstances, communication is key. Companies should proactively reach out to consumers to provide alternatives to chargebacks, such as extending return deadlines and the validity of vouchers to provide consumers with other options. As always, ensure clarity in transaction receipts, terms and conditions, and all correspondence. This will limit disputes caused by customer confusion.

Regular, but not bothersome, education and explanation are also important. Consumers often don’t realise the affect their chargeback claims could have on their favourite merchants. Appealing to their goodwill and patience can help to flatten the chargeback curve.

Even after a chargeback, merchants should continue to positively engage with the consumer. It’s important that the merchant pursue the consumer’s best interests, even when they’re unhappy with a product or service. This includes carrying out their role in returning the funds to a customer’s account. A chargeback isn’t the end of a customer relationship and, in the current climate, merchants need to show they care for their consumers and their business.

 

Collaboration beats escalation

Remaining open, transparent, and proactive with consumers will boost loyalty and help deescalate potential disputes. However, many chargeback disputes cannot be avoided or mitigated against. To ease the logistical and administrative burden, merchants need to pick their battles. It takes time to respond to disputes. Depending on the volume of disputes, merchants must decide which ones are worth challenging and which ones are easier to just credit.

This can be aided by greater information-sharing between merchants and issuers. The exchange of customer support contact information and transaction data helps merchants decide which disputes are worth pursuing. They can then move beyond basic considerations like transaction sizes to more effectively deploy their resources. As a result, businesses benefit from reduced investments in manual processes.

Businesses should also provide the capability for customers to track the progress of their dispute. When the consumer understands where they are in the resolution process, they are less likely to make unnecessary requests of customer service. Indeed, the more calls a consumer must make, the greater the chance they will take their business elsewhere in the future.

The disruption of coronavirus is far from over, and it’s not yet clear how the pandemic will transform the business landscape. Yet, merchants should prepare themselves for an oncoming chargebacklash that will strain their dispute resolution processes to the limit. Fortunately, they can weather the storm by collaborating more closely with issuers, introducing consumer-first service, and applying the payment protection systems needed to manage disputes, while still protecting customer relationships.

 

Business

WHY AUTOMATING CAN FUTURE PROOF YOUR BUSINESS

By Ryan Demaray, Managing Director SMB EMEA at SAP Concur

 

Every business has administration duties that can be considered mundane and time consuming  but are a necessary core function of operations. Whether it’s paying suppliers on time or processing expense requests, tasks such as these are necessary for the day-to-day running of a business – however it’s safe to say that these tasks are never ranked as the most engaging or rewarding by your employees.

With a UK recession on the horizon, finance teams are under pressure to not only control costs but provide guidance to the business on where savings can be made. This will only happen if your employees are able to focus on tasks that not just keep a business running but allow them to add further strategic value.

Automating the invoice function is just one step towards giving your finance team back valuable time, not only creating a more efficient and productive workplace, but a positive employee experience that supports growth and stability across your business.

 

The gateway to better efficiency 

From receiving the invoice, inputting data, chasing approvals and moving it down the chain of command, research shows that it can take an average of 17 business days to manually process an invoice. For SMBs with a finance team of approx. eight people, implementing an invoice management solution can save on average 69 hours per week.

By allowing the technology to do the heavy lifting, your finance team can use the time to focus on more strategic elements of the business. This includes providing them a moment to take a step back and holistically look at the spending trends and costs across your business. By doing so, they can often pinpoint spend patterns, but also identify cost reducing opportunities, providing visibility and guidance to help positively impact the bottom line in the short and long-term.

 

Enabling growth and accuracy

As your business grows the number of vendors and suppliers you use often increases in parallel. This growth in external stakeholders can cause challenges and maintaining consistent and timely payment of invoices to suppliers is crucial. The Federation of Small Business estimates that late payments contribute to 50,000 insolvencies annually, costing the UK economy £2.5bn. The UK government recognised this and in 2019 implemented a prompt payment initiative, aimed at helping small suppliers get paid on time by enterprises, with the potentially penalty of not awarding government tenders to those who do not adhere to the prompt payment practice.

In addition to this, inhibiting the lack of cashflow to small business through late or unpaid invoices can have more than just a monetary impact. With poor invoice payment practices, your business reputation is likely to suffer damage, which in turn carries consequences across with future suppliers, as well as customers.

Through invoice automation, you are able to streamline your finance and accounting processing by making sure that payments are processed in time, resulting in avoidance of payment delays, calls from suppliers querying about invoice payment timescales and vital staff time responding to these.

 

Supporting employee engagement

Employees’ experiences affect their work outcomes and carry the benefits of high engagement, increased productivity, and a lower staff turnover. Creating a better employee experience is a challenge faced by many SMBs, but once cracked can provide benefits across your business.

More than just providing a workplace environment and culture, businesses with motivated employees can find recruitment and onboarding costs reducing, with retention rates increasing.

But it’s not only the employee that benefits from a better experience – your customers do as well. With many often on the frontline of customer interaction, it’s difficult to keep customers happy if your staff member is disengaged. By employing tools that allow the automation of mundane and repetitive tasks, employees can focus on aspects of work which they care about most.

 

Future proofing for tomorrow

Digital transformation is here and for SMBs employing an automated invoice solution, is a positive step in becoming a business that is ready for scale and growth. Not only will it help benefit your bottom line, it will create positive staff experiences and efficiencies, that help truly optimise your business – now and in the future.

 

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Business

COULD GRAPH TECHNOLOGY BE A POWERFUL WEAPON AGAINST CORONAVIRUS FRAUD?

Crisis funds and loans put in place to help support businesses during the health emergency have become a prime target for cybercriminals. Neo4j’s Amy Hodler examines how graph technology could be a powerful weapon against these scams

 

Fraudsters will use any opportunity to siphon off funds illicitly, and the pandemic is proving no exception. With coronavirus moving rapidly across the world and locking down countries in its wake, cybercriminals have been quick to launch sophisticated methods to callously exploit the situation.

Cybercriminals have been fast to impersonate trusted organisations such as the World Health Organisation, which has itself seen a five-fold increase in cyberattacks since the start of the crisis.

The pandemic is opening the doors for fraudsters who are taking advantage of changes in normal business processes, controls and working conditions to carry out fraudulent activities. Security controls, for example, are often not as strong as normal due to the speed aid is required and the fact that many people are teleworking.

Amy Hodler

Cybercriminals are using fake or stolen identities to draw down governmental emergency funds. In France, for example, the Paris Prosecutor’s Office has launched an investigation into massive fraud of the country’s temporary unemployment scheme where fraudsters have drained €1.7 million. It is investigating potential international links to the fraud.

In a statement Paris Prosecutor Remy Heitz said that more than 1,740 fraudulent operations were discovered across the country on behalf of 1,069 different businesses asking for wire transfers to over 170 different bank accounts.

 

Can financial services’ practices help?

Aid departments and organisations should look to the mature practices of the financial services industry for a lead in combating fraud. Here firms repeatedly and meticulously check and compare transactional data to look for suspicious behaviour that may indicate an attack.

Like applications for financial aid for the impact of the coronavirus, malevolent actors look to defraud financial institutions using false identities when creating accounts and putting together loan applications. Personal data such as addresses, telephone numbers and emails are cleverly assembled to model assumed and phony identities.

 

A need for a different approach

One of the main reasons traditional approaches fall short is that most fraud detection systems are based on a relational database model where data is stored in predefined tables and columns. With large, unstructured data sets, relational databases swiftly reach their limits; queries turn out to be far too complex and response times lag. Banks and government authorities need the ability to follow a trail from one account to another, viewing a fraud network as a whole complete entity to work out how activities are linked.

Unlike relational databases, graph database technology not only represents individual items of data such as person, account number, home address, but also their relationships with one another such as how they are related. Any number of qualitative or quantitative properties can be assigned, showing complex relationships in an easy to understand way.

One of the best graph algorithms for fighting coronavirus cybercriminals is ‘PageRank’, which finds important nodes (objects) based on their relationships and interprets them using visualisation tools. For fraud detection in banking, the algorithm identifies important or influential customers who are featured in a large number of financial transactions. Nodes with a high PageRank Score can be illustrated using a visualisation tool so that they appear larger in the view and can be immediately picked up.

Another key algorithm is ‘Weakly Connected Components’, which works to reveal the hidden networks that form a fraud ring based on common identity features such as multiple applicants all residing at the same address. These hidden connections provide invaluable information when hunting down fraud.

 

Uncovering fraud rings with incredible accuracy

 Cybercriminals are continually developing attack methods, sharing infrastructures to maximise their opportunities for success. Graph technology has the capacity to help stop advanced fraud scenarios in real time.

Graph databases can help future proof an organisation’s fraud prevention initiatives by enhancing insight based on data relationships and building connected intelligence.

 

The author is Director, Analytics and AI Program at Neo4j, the world’s leading graph database company, and co-author of Graph Algorithms: Practical Examples in Apache Spark & Neo4j, published by O’Reilly Media

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