Visa is planning to add a new chargeback fee targeted towards new fraudulent categories, focusing primarily on payments made in the travel industry.
The fee is planned to be set in place beginning October 1st 2014 and is set to cost merchants an additional €12 per chargeback dispute. The new fee is for transactions based in the EU and is categorized under CNP (Cardholder-Not-Present) payments placed online or over the phone. While the exact reasons are not yet provided, it is understood the majority of the chargeback codes associated with fraudulent transactions are travel based.
A major reason for adding the new fee is the rising rate of fraudulent CNP charges originating from the travel sector, particularly when orders are placed online or over the phone. According to Financial Fraud Action UK, the financial services industry’s anti-fraud group, it is predicted the amount of travel related fraud would treble over the next year resulting in €3 million a month.
“A fee of €12 per unsecure keyed fraud chargeback will be levied on Visa Europe acquirers for unsecured CNP transactions.” stated Visa’s message to acquirers.
2 criteria Visa mentioned were:
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-Where a merchant is operating within a non-secure key-entry environment.
-Where the transaction is eligible to be charged back for reason of fraud and the issuer has not been reported under Visa Europe’s Issuer Monitoring Programme for reasons of excess fraud.
As with the majority of other chargeback reason codes and fees, Visa is hoping it will reduce the amount of fraud merchants expose themselves to. It should also help beef up fraud prevention and screening processes throughout the EU.
“That is a concern because it’s a really tough year and we would not want to lose anyone unnecessarily. This charge may be enough to make card transactions unviable for some companies,” Barry Gooch, chairman of the travel industry anti-fraud group Profit.
Additionally, MasterCard is expected to follow suite and add a similar chargeback fee for these types of fraudulent charges.