Ai Editorial: Paying via click, tap or touch is fine, but what about chargebacks?
First Published on 6th June, 2017
Ai Editorial: Completing a transaction via wearable devices or relying on biometric authentication for shopping is exciting. But airlines need to dig deeper to assess potential issues, writes Ai’s Ritesh Gupta
New technology, emerging ways to transact, biometric data for authentication…all of this is exciting indeed.
Say you are the airport, your wearable device guides you to your gate, a transaction can be done via an app or a platform featuring chatbots, in a way you are about to embrace 100% self-service passenger journey. This simplifies travel, a traveller is in more control than ever.
But it isn’t a straightforward process for airlines, as new technology or even payment methods need to be incorporated into their existing infrastructure.
Here is what airlines need to consider to avoid potential issues related to poor customer experience and chargebacks:
One mistake and a chargeback is a possibility: The adoption of wearable devices or the use of biometric technology like fingerprint scanning and facial recognition can’t be ignored. Speed and convenience are definitely major plus points. These develpoments have already showed signs of becoming a norm. Companies like Mastercard are counting on biometrics like fingerprints or facial recognition to verify a cardholder’s identity, simplifying online shopping. The digital check identifies users using unique individual characteristics, like fingerprint or face. Of course, when there is no need to remember a password, the chances of a conversion go up as there is speeding up of the digital checkout experience. According to Juniper Research, the number of OEM-Pay contactless users, including Apple Pay, Samsung Pay, and Android Pay, will exceed 100 million for the first time during the first six months of this year, before crossing 150 million by the end of 2017.
So keeping pace with such developments is a must for any travel e-commerce brand. But it shouldn’t be forgotten that the chargeback process is old-fashioned. It is vital to assess how to keep pace with disruption in payments. If there is claim for a chargeback and airlines attempt to dispute the same, then what will issuers accept as convincing proof needs to be ascertained.
According to Monica Eaton-Cardone, co-founder and COO of Chargebacks911, and the CIO of its parent company, Global Risk Technologies, referring to wearable payments, networks will not have considered the different types of data that will be associated with these technologies and, therefore, will not recognize valuable information as valid forms of evidence.
In a way, card network regulations are stuck in the past, and haven’t made any significant progress.
“It will be years until the data associated with these wearable devices will be recognized by the card networks, leaving merchants liable for billions in losses from undisputable, illegitimate chargebacks,” Monica mentioned. Even in case of biometrics, she underlines that it can be identified that a cardholder “almost definitely authorized a transaction, but if the card network won’t accept biometric data as proof, that information is of no use. She points out that biometric approval is part of a coherent antifraud plan, not a answer on its own.
Even Visa last year acknowledged that one of the challenges for biometrics is scenarios in which it is the only form of authentication.
“Biometrics could result in a false positive or false negative because, unlike a PIN which is entered either correctly or incorrectly, biometrics are not a binary measurement but are based on the probability of a match. Biometrics work best when linked to other factors, such as the device, geolocation technologies or with an additional authentication method,” stated Visa.
Monica is certain that in the absence of a flexible infrastructure that can facilitate options such as wearable payments, the problem of chargebacks will only swell.
Also, payments via chatbots (say on Facebook Messenger) can be integrated in a simple way. Brands need to make the most of such interactions, considering the popularity of messaging apps.
But the team at Chargebacks911 also cautions against poor execution of chatbots, in case they aren’t proficiently managed then there can be user frustration and more chargebacks.
Being aware of new avenues for fraud: A major hurdle with emerging technologies lies in evaluating how they will be implemented and what the response will be.
Visa does recommend that new forms of authentication must reach a balance between speed and security.
Specialists recommend that making judicial use of “friction” during the booking flow or checkout isn’t a bad option.
So friction can result in careful consideration of the booking process. In case a shopper doesn’t take that fraction of second to be in control of the situation, it can result in a buy they weren’t completely sure of or they may even complete a transaction without thinking through it properly.
Do remember that unauthorized transactions by family members are one of the primary causes of chargebacks.
As for being realistic with 3DS 2.0, Chargebacks911cautions that this new development is an effective tool for targeting criminal fraud, but it has little impact on friendly fraud, which is ultimately responsible for most chargebacks.
Being prepared
Airlines, as merchants, can't do away with the need to go for multiple layers of technology such as tokenization, biometrics etc. to protect each and every transaction.
Yes, as much as digital payments strategy is going to revolve around choice, there is also a need to ensure the same meets not only a shopper’s preferences, but also ends up meeting issuer and merchant’s needs, too.
Discuss and learn about emerging developments at the upcoming 6th Airline & Travel Payments Summit Asia-Pacific, to be held in Bali this year (29 – 31 August, 2017).
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