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KEEPING THE CHARGEBACK GRINCH FROM RUINING CHRISTMAS TRAVEL

Gabe McGloin, Head of Merchant Sales & International Business Development at Verifi

 

As we all turn our attention to Christmas travel, we are hoping for twinkling lights, Christmas markets and lots of joy. However, with some of the very public travel disasters that have hit the headlines this year –  Thomas Cook comes to mind – many travellers may be more cautious than normal.

The tour operator’s collapse earlier this year left more than half a million summer holidaymakers stranded overseas, with many unable to afford a flight back home – their trip of a lifetime turning into a waking nightmare. What’s worse, they had to pay for food and accommodation while waiting for rescue. One unlucky traveller was even billed an additional £2,500 by a Florida hotel after Thomas Cook failed to remit his original payment.

While failures of this scale are thankfully rare in the travel industry, such financial calamities are among the main causes of chargebacks – requests from consumers to reverse payments made from their debit or credit card. Few industries are as exposed to chargebacks as the travel sector; given the intense competition, minimising such losses needs to be an urgent priority for every business in the category. But why are chargebacks so common, and what can operators do about it?

 

Why travellers demand their money back

Whether in travel or perhaps any other industry, some people will take the opportunity to defraud financial institutions on their own legitimate purchases: the expensive camera that’s “stolen” and claimed on the travel insurance; the disputed restaurant bill for a meal that they swear they never ate, and so on.

In truth, fraudulent claims like these make up a small percentage of chargeback claims. More often it’s simply a case of forgetfulness behind transaction disputes, which may result in chargebacks from  consumers being charged for no-shows, charges for dining and minibar consumption, and retail purchases.

It’s only when people return after their travels and the January reality sets in that they open up their credit card statement and, with great surprise, see a list of transactions that they don’t recognise.

It doesn’t matter if people are making claims in good faith and honest forgetfulness. The cost of refunding or investigating these payments is a major drain on travel businesses’ resources, which is why they need to put themselves in charge of improving refund processes.

 

Striking a balance

Chargebacks aren’t just a matter of losing money, important as that is. It’s also a process that is fraught with reputational risk. If travel operators are too harsh, or too untrusting in their response to customer claims, they can make their customers feel like they’re being accused of lying – and victimisation is a poor basis for a long-lasting and loyal relationship.

That doesn’t mean that travel operators should accept each and every chargeback as the cost of doing business. On the contrary: they can take a number of proactive steps to help prevent chargebacks from happening – and, just as importantly, better protect their customers from genuine errors.

Good chargeback prevention practices are more than just a guard against fraud: they are an essential element of great customer service, where disputes are resolved quickly thanks to full access to comprehensive transaction records.

Investigating chargebacks can be difficult enough for your average merchant to achieve, but for the travel industry it’s even harder (and more expensive) since these transactions usually take place abroad. Given all the attendant difficulties of language, time differences and other complications, it makes much more sense for travel businesses to focus on prevention.

 

The data-sharing solution

Fortunately, there have been many recent innovations in the payments industry that makes it much easier for businesses to investigate transactions effectively. These include technologies that facilitate better and more timely exchange of relevant transaction or dispute data between merchants and card issuers, helping to slash the time required for resolving disputes.

The key to reducing chargebacks is much closer collaboration between travel operators and issuers throughout the entire dispute process. Implementing steps such as providing clear billing descriptors and fostering order data-sharing between merchant and issuer can make a massive difference to the whole process, especially in reducing dispute volume overall.

For example, the latest collaboration technologies enable issuer staff members to access transaction information from a travel company’s CRM system, and then use this to check disputed transactions quickly. They can also push near real-time dispute notifications so that the business can review and resolve disputes faster to reduce time, resources, and costs associated with the chargeback process.

These technologies don’t just save time and money through reducing chargebacks and streamlining the investigatory process. They also result in lower overall dispute volumes and, perhaps even more important, improved loyalty from the customers themselves. Even if disputes aren’t ruled in their favour, customers will appreciate the speed with which the query was resolved. Meanwhile, providing comprehensive information on the transaction will mean that customers won’t have cause to continue their complaint – bringing Christmas cheer to travellers and providers alike.

 

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THE INVESTMENT IMPLICATIONS OF CLIMATE RISK – AN INVESTMENT MAN-AGER’S VIEW

In the final release of its three part series on climate risk, leading independent fixed income manager, Cameron Hume, looks at how attitudes to climate risk can be factored into long term investment decisions and whether those investment decisions can be used to drive the direction of travel with a global response to climate risk.

 

It is widely accepted that greenhouse gas (GHG) emissions must be decreased in order to avoid a potentially catastrophic increase in global temperature.

 

If we also accept that a global response is required to achieve a global reduction in GHGs, but that countries will act according to their own discretion, then the next piece of information we have is the recognition that companies will face different regulatory and legal regimes depending on which part of the world they operate in.

 

It is a complicated set of factors to consider and it can be tempting to put off any decision making. However, the Financial Stability Board has made it clear that action is required now.

 

The 2017 report by the Taskforce of Climate Related Financial Disclosures (TCFD), stated: “The large-scale and long-term nature of the problem makes it uniquely challenging, especially in the context of economic decision making. Accordingly, many organizations incorrectly perceive the implications of climate change to be long term and, therefore, not necessarily relevant to decisions made today.”

 

In a bid to help navigate the difficult process of taking on appropriate exposure to climate risk, the TCFD recommends the implementation of tried and tested methods that financial market participants are already familiar with. Improving disclosure is a key input to supporting better management of climate risk. The TCFD recommend considering climate risk in a framework consisting of Governance, Strategy, Risk Management and Metrics & Targets.

 

For Cameron Hume, Governance means that there is an agreed investment policy that all stakeholders are in agreement with. Strategy should therefore support development of policy and systems which incorporate informed Risk Management. Metrics & Targets must be built into portfolio measures, client reporting and disclosures to bodies such as the PRI.

 

The Cameron Hume Global Fixed Income ESG Fund, launched in 2018, follows the TCFD methodology while selecting issuers judged to manage their ESG risks better than their peers.

 

Chief Investment Officer, Guy Cameron, explains: “In Cameron Hume’s view, a key indicator of an issuer’s sustainability is the quality of its governance and risk management framework, which we know must take into account climate risk.

 

“A company that already has low emissions will be more likely to maintain low emissions in the future than a company with a stated aim of lower emissions but a bad track record of delivering on promises. Even those who reliably commit to a transition plan require access to significant funds, technology or personnel to make such a major shift in operations.

 

“Similarly, as many governments introduce legislation to reduce GHG emissions, inability to achieve the legally mandated targets may weigh on companies even as they transition.

 

“As the likelihood of governments imposing tough targets on emissions differs from country to country, we believe the best way to manage risk is to invest in the companies with the lowest current net emissions, accounting for gross emissions and mitigating factors. Such issuers will likely have the governance framework, risk management capability and strategy in place to allow them to embrace any new rules effectively.

 

“For these reasons, the Cameron Hume Global Fixed Income ESG Fund favours companies with lower net emissions currently, rather than those requiring significant changes.”

 

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AURIGA, PROVIDER OF NEXT-GEN BANKING TECHNOLOGY, OPENS ITS FIRST OFFICES IN SPAIN AND MEXICO

Specialising in omnichannel banking and cybersecurity, the Italian company continues its international expansion with two new offices in Madrid and Mexico

 

Auriga, an Italian company specialising in omnichannel banking solutions, today announced the opening of two new branches in Spain and Mexico, following its international expansion strategy. The subsidiaries, Auriga Iberia and Auriga Latin América, will manage the integration of Lookwise Device Manager (LDM), the cybersecurity solution acquired from S21sec, into Auriga’s portfolio of omnichannel banking solutions. With this milestone, the company now employs 400 professionals.

Auriga’s objective is to become a reference point for financial institutions in the Spanish and Latin American regions. The Latin American office is situated near to Guadalajara, Mexico and represents a real stepping stone towards reaching the local market. The Spanish office is a research and development hub focused on cybersecurity, with the aim of enriching Auriga’s offering and expertise to support banks in their digital transformation path.

These two new openings are in line not only with the acquisition of LDM, but also form part of Auriga’s ongoing strategic partnership programme, which is aimed at consolidating its presence on a global scale. Auriga recently announced strategic alliances with the system integrators Minsait, a company from Indra, and TRSYS.

 

They are also in line with the membership recently signed off with:

  • ATM Security Association, part of the ATMIAnetwork, aimed at bringing manufacturers and their suppliers together with the common goal of establishing vendor independent standards for security solutions within the industry.
  • ATEFI, the Latin American association of operators of electronic transfers of funds and information services aimed at promoting and ensuring the exchange of information among associates, the development and competitiveness of electronic funds transfers and information services in the Latin American financial sector.
  • ECSO(European Cyber Security Organisation), whose main goal is to develop a competitive European cybersecurity ecosystem, to support the protection of the European Digital Single Market with trusted cybersecurity solutions, and to contribute to the advancement of European digital autonomy.

 

Auriga provides omnichannel banking solutions to support its clients in the digital transformation of bank branches, a key area of focus for financial institutions.

“These openings are in line with Auriga’s ongoing investments and current local partnerships aimed at promoting our solutions in the Spanish and Latin American markets”, explains Vincenzo Fiore, CEO, Auriga. “The current pandemic has highlighted, like never before, the power of technology in helping the financial sector continue to provide excellent service to its customers while ensuring their security. As specialists in omnichannel banking, Auriga wants to assist Spanish and Latin American financial services to make this leap into the branch of the future.”

For years, the company has been one of the key technology providers in Europe for the digital transformation of bank branches. Founded in Italy, 70% of the country’s ATMs are equipped with its WinWebServer (WWS) software. This advanced omnichannel solution enables the efficient integration of various modules into banks’ systems and provides an enhanced customer experience while optimising costs.

 

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