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Invisible payments: getting the balance right

Tuesday 4 September 2018 | 09:44 AM CET

The Chargeback Company`s COO Monica Eaton-Cardone looks at the evolution of the payment industry and the likely impact of ‘invisible’ payments

More than a decade after it was introduced, the contactless payment has entered the mainstream, fuelling all-time high levels of debit and credit card usage. This peak in demand proves that there is a major appetite for payment innovation, and industry observers are now asking what the next development will be.

Since modern consumers evidently favour instantaneous results, retailers are feeling the pressure to enable faster payments for their customers that go one step further than contactless, without hindering security. Closing in on a frictionless, unobtrusive experience keeps bringing us to this idea of the invisible transaction.

Mainstream invisible payment is undoubtedly the next major step for the payments industry, driven by the likes of Google and Amazon. But it will come at a cost for retailers in terms of implementing the required infrastructure, which means that (like contactless), invisible payments will emerge over a period of years rather than months - a payments evolution rather than revolution.

The downside of disruption

It’s not just an improved customer experience and the prospect of fewer abandoned shopping carts that tempt retailers when thinking about an ‘invisible’ future. Much like extras and flash sales, free-flowing transactions made under an invisible payments model can guile a consumer into spending more. This can prove an enticing revenue and economic boost… until payment disputes hit.

Removing friction at the checkout entirely will likely lead to an increase in transaction disputes. The so-called invisible payments are a catalyst for over-spending and reduced consumer accountability (failure to read purchase terms, etc.). Coupled with the ease of disputing a transaction today – it’s as simple as contacting their bank up to 120 days after the purchase was made to claim their money back – the consequence of added efficiency (for the consumer) will require additional checks and balances somewhere else.

In this digital era, we’ve seen a consistent rise in claims of fraud made in a bid to restore funds on purchases that have been regretted or forgotten about. And it’s getting worse: more consumers than ever are willing – and able – to displace liability of issues with their order.

We need to approach an ‘invisible’ disruption with great caution. Otherwise, removing discernibility of the checkout will give consumers a ‘get out of jail free’ card where their regretted purchases are concerned.

Harmonising convenience and integrity

Invisible payments are currently being tried and tested by bigger players in the retail game who are able to take risks in the name of trailblazing. But, as required for mass adoption of any new payment technology, the kinks need to be ironed out. Unfortunately, the technology can run smoothly, the fraud risk is curtailed, yet payment disputes fail to dwindle.

Of course, we need a protection system in place for genuine order issues – otherwise, consumers would never buy into new payment systems and commerce could not survive. But current dispute models are in danger of failing to keep pace with these innovations.

If retail merchants want to take invisible payments far and wide, they need to consider the consumers who will be eager to take advantage of dissonance at the checkout. However, the rules are changing.

Dispute models change tack

Aiding invisible payments in their frictionless mission, Visa and Mastercard are updating the dispute process.

Visa’s Visa Claims Resolution (VCR) promises to deliver automation and data-driven decisions, basing its new model on trying to pinpoint who’s really liable: the customer or the merchant. We expect Mastercard to differentiate itself here and have the merchants bring their evidence straight to the table, before the blame has already been assigned to them.

But neither of these approaches is completely established yet – those responsible for the latest payment methods need to keep that in mind. Rather than focus on what happens during the transaction, consider the follow up: when a consumer reviews their bank statements and sees something they don’t remember.

Processes for securing payments

In lieu of a flawless dispute model, what can the minds behind invisible payments do to get the balance between security and convenience right in these early days?

On a technology front, tokenisation and two-factor authentication should be built into invisible payments, to ensure the trust needed for mass adoption is put in place. Tokenisation is just one of a number of technologies that can make the payment component of invisible payments come together, alongside embedded commerce and APIs.

Meanwhile, merchants can strengthen the customer connection by providing assurance that the process is secure. Permissions and approvals at the appropriate time in the payment process will boost consumer confidence and lead to fewer payment disputes.

By focusing on building confidence in their products and services, merchants can minimise their likelihood of payment disputes. It’s important to give customers access to innovative payment technologies while reinforcing their confidence in the platform and process.

Beyond the new processes

Payment innovation should ensure that new ideas are balanced with current protection processes. This will minimise any threat to the commerce chain. For a long time, dispute models simply weren’t up to scratch to cope with changing payment trends. Now, the payment schemes are trying to solve this. Take a read of Beyond VCR, our initial impact report and analysis study on the first dispute process changes in decades, Visa Claims Resolution.

About Monica Eaton-Cardone

Monica Eaton-Cardone is an international entrepreneur who provides sustainable revenue retention and risk reduction solutions to the ecommerce environment. She is the co-founder and COO of The Chargeback Company, known as Chargebacks911 outside Europe.

 

 

About The Chargeback Company

The Chargeback Company, known as Chargebacks911 outside Europe, provides comprehensive and highly scalable solutions for chargeback compliance, handling services and fraud strategy management. The company helps decrease the negative impact of chargebacks, thereby increasing revenue retention to help ensure sustainable growth for every member of the payment channel.

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