The world of digital payments has undoubtedly revolutionised the way businesses operate. Yet, as with every advancement, it’s not without its pitfalls.
One of the growing concerns amongst small business owners, particularly in the UK, is the rise of ‘friendly fraud’.
But what exactly is this phenomenon and how is it shaping the landscape of digital transactions?
The Unfriendly Reality of Friendly Fraud
‘Friendly fraud’ might sound benign, but its implications are far from it. Essentially, it’s when a cardholder disputes a legitimate transaction with their issuer.
Recent data suggests that a staggering nine out of every ten small businesses in the UK have experienced a surge in this form of fraud in the past year. In fact, up to a fifth of their sales have been controversially disputed, according to research from Visa.
The Visa Safeguard: CE3.0
Recognising the urgency of the issue, digital payment behemoth Visa has sprung into action, launching a new protective framework known as Visa Compelling Evidence 3.0 or CE3.0.
This framework is tailored to empower businesses in determining the authenticity of charges, ensuring they are duly authorised by the cardholder.
CE3.0 operates on a systematic approach:
Transaction History
Businesses can now present records of two previous undisputed transactions, using the same payment method. These need to fall between 120 to 365 days from the dispute date.
Mandatory Matching Elements
Across these transactions, either the IP address or the device ID/fingerprint must coincide.
Additional Verification Criteria
One other element, be it an IP address, device ID/fingerprint, shipping address, or account login ID, must also align.
This stringent yet straightforward methodology offers a robust shield for businesses, ensuring they aren’t unduly penalised due to unintentional or malicious disputes.
Summary
In a world rapidly shifting to digital-first, it’s paramount for businesses, especially smaller ones, to have a dependable safety net.
Platforms like Visa play an integral role in ensuring this safety, and with measures like CE3.0, it’s evident that they’re committed to ensuring businesses can thrive in a secure digital transaction environment.
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