Instantly Resolving Wrongfully Rejected Payments at the Point of Sale
It is reassuring to know that debit and credit card fraud prevention mechanisms are getting increasingly stringent; credit and debit cards make up the vast majority of payment fraud, probably close to 90 percent of all domestic fraud-identity cases. But are modern fraud systems getting too trigger-happy? Are too many legitimate transactions getting rejected, and is that causing trust issues in significant numbers of cardholders making them look elsewhere for financial services?
The Rise in False False-Positives
The number of wrongfully rejected payments, or false positives, is growing, in part due to advanced fraud techniques and the increasingly technically advanced fraudsters. Inevitably, unrecognized fraud schemes increase the number of legitimate purchases being flagged as potentially suspect. This results in more transactions being incorrectly blocked at the point of sale (POS).
While we all welcome better security, there is a problem that is growing and becoming more serious than just embarrassing a few unfortunate customers: legitimate customers making genuine transactions and having their card blocked at the moment of purchase. Increasingly, these episodes are awkward enough that many customers lose trust in their card and so drop their normal card in favor of alternatives issuers who are more than happy to take their business.
How can issuers maintain a positive, consumer-focused payment experience? Easy! Communication, communication, communication! Customer engagement is at a premium within the highly competitive financial market place. Therefore, it’s vital that Issuers know how and what to communicate with their consumers.
In most instances, if a suspicious transaction results in a card being blocked, the issuer would make an outbound call to the cardholder. Such calls may well be ignored since they may come from an unknown number. The cardholder then has to call back in, go through rigorous validation steps and then confirm that the transaction was valid. After all that, with potential embarrassment, they are then allowed to use their card again.
What if we lived in a world where the cardholder could instantly confirm to the issuer that the suspicious transaction is legitimate? To improve the outcome of false positives, more agile fraud systems can send a text message to the cardholder (at no charge) asking for approval the moment a transaction gets flagged as suspect. The consumer can immediately verify the payment and the transaction continues unhindered.
With this new type of communication service, real-time messages can be generated automatically and sent to cardholders’ mobile device requesting the verification of a suspect transaction. If there is no response to the text, the service can then send emails, and finally, make a voice call out to the customer. A suspect transaction that is not validated will, of course, still be rejected and the card possibly blocked. But more often than not, a legitimate transaction that looked potentially problematic will be instantly validated by the end-user through their phone, avoiding any troublesome rejections or blocks and the ensuing hassle to get reinstated.
In the past we have relied extensively on call centers and personal phone calls to cardholders to resolve these issues with the expected delay. Today, we can make this communication real time through the use of SMS messages and email. Looking ahead, many banks are embedding push-messaging technology into their banking apps, and eventually offering this as a capability to other non-bank payment apps.
Engaged Customers Remain Customers
With the vast majority of the world’s population having access to a mobile phone, modern consumers are more connected than ever; a majority of consumers are online for a significant portion of their lives – including at the POS. The direct mobile communication channel to consumers is so prevalent that it is negligent to ignore it. This is especially true given the potential repercussions of an incorrectly blocked card; merchants lose sales and cardholders lose trust in the issuer and go elsewhere.
While one could conclude that this level of connectivity makes engagement easier, the proliferation and popularity of these channels means that financial institutions must pursue a more intelligent and sophisticated approach to customer interaction. Using mobile messaging technology as part of a suite of fraud prevention mechanisms can have a dramatic impact on false positives, and actively engage cardholders in the fight against fraud in real time.
A potentially problematic false positive can be resolved in seconds without the need for lengthy call-center calls just to unlock a card that was unnecessarily blocked in an abundance of caution. With appropriately positioned communication tools, merchants close more transactions, customers regain control and trust and issuers get to keep their customers rather than embarrass them – all in real time.
What do you think? How will cardholders react to instant messaging while at the POS?