Focus on Visa’s Euro Chargeback Policy
“May you live in interesting times,” or so the saying goes.
I’m not sure I’ve seen this much uncertainty in the financial industry since 2007 with continuing problems in Europe with the euro, the surprising victory for the U.K. to “leave” in the Brexit vote and the bankruptcy of Puerto Rico.
My strategy and our philosophy at Segpay has always been to deal directly with the issues that you know about or can plan for, keep your eyes open to what may be coming down the road and be ready to make adjustments as needed.
This of course is a good philosophy for any business and any industry but the adult market is even more prone to the significant and sudden changes set by the card schemes.
If you remember, back in April I wrote about the changes resulting from the Visa Inc. acquisition of Visa EU: “Effective July 1, 2016 Visa EU's more lenient policy of 2 percent and 200 chargebacks will be replaced by the more stringent 1 percent and 100 chargeback policy now used in North America.”
We’ve seen many merchants tackle this change and are prepared for the new compliance threshold. Others are implementing creative work arounds to keep the number of chargebacks below 100 by setting up multiple corporations and distributing volume across multiple accounts.
Although this may be successful in the short term, you have to expect that Visa will catch on to this work around. They will start matching names and principals and other verifications to reduce this type of activity. Merchants need to get their ducks in a row and should be working with their payment service providers to figure out long-term solutions for their business to stay in compliance.
At SegPay, we have noticed that U.S.-based merchants that are bringing their transactions back onshore are seeing some significant improvements. Higher through-put, lower chargebacks and reduced transaction fees are showing up on the bottom line. This is a stronger, long-term strategy that will allow merchants to be prepared to implement additional changes that are sure to be coming from Visa in the future.
Merchants looking to reduce European chargebacks can implement additional strategies to stay within compliance. There are two areas I’d like to bring to your attention.
Secure Code, which will become more prevalent in the European market, is one of them. This additional verification step during checkout may initially result in more consumers abandoning the payment process. However, U.S. customers are not as familiar with the process and one additional step, might be just one too many for some horny, I mean impatient, consumers.
I also recommend that merchants implement third-party verification services such as Verifi and Ethoca to prevent fraudulent activity. These services reduce chargebacks by alerting merchants to charges that could be problematic. Merchants then have the ability to refund fraudulent charges to consumers in a timely manner thereby preventing a chargeback.
At Segpay, we continue to stay abreast of these developments and help our clients make the right choices for their unique situations. We are continuing to improve our admin panel, expanding our product offerings and bringing on new partners where beneficial. Implementing the new Visa Inc. changes in Europe will be beneficial for merchants in the long run.
It took only three years for Cathy Beardsley to turn startup SegPay into a profitable company. As president and CEO, Beardsley oversees the day-to-day operations and long-term strategic planning for the company. SegPay is one of four companies approved by Visa USA to operate as a high-risk Internet payment service provider in the U.S. Since 2005, SegPay has offered online merchants a state-of-the-art billing platform that provides real-time payment processing around the globe.