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Fixing “Chargeback Lag” with the Kount Integration of Ethoca

posted on: Fri Aug 05 2016

By, Scott McLean, Product Manager, Kount

Chargeback Lag” – the typical 45 days between the time a chargeback is actually incurred and the date the merchant is notified – wastes time and money, masks fraud attacks, and messes up financial reporting. But the surprising and maddening part is that card issuers often know within hours about a chargeback! It’s the lengthy reporting process that introduces Chargeback Lag, when revenue and profits suddenly turn into losses months after they’re booked. 

Chargeback Lag Without Ethoca

That’s where Ethoca comes in. Ethoca is a global, collaborative network of card issuers and merchants that works to eliminate Chargeback Lag. When an issuer confirms a bad transaction, an alert goes out to the Ethoca network. Instead of waiting weeks for this vital information, merchants know at almost the same moment the issuer knows. 

Chargeback Lag With Ethoca

This elimination of the Chargeback Lag delivers significant financial and operational benefits:

  • Eliminate losses from fraud. Merchants can cancel bad orders before they ship and avoid stolen merchandise losses, shipping losses, wasted employee time and more.
  • Shut down fraud immediately. Kount merchants armed with data about a fraudulent transaction -- card number, Device ID, IP address Geo-Location, etc. – can rapidly identify other fraudulent transactions linked to it and shut down those transactions, report back to the Ethoca network, and implement new fraud rules to stop future fraud – all from a single console with a few mouse clicks! No more finding out about a sustained fraud attack months after the fact, when it’s too late to act.
  • Avoid chargeback costs. Merchants can issue refunds to cardholders immediately and avoid chargeback fees and fines, as well as prevent increasing issuer decline rates and lower acceptance rates that excessive chargebacks foster.
  • Reduce wasted OPEX. In about one minute, agents eliminate all the costly and time-consuming paperwork involved in the old Chargeback Lag process: time spent investigating chargebacks, reconciling financial statements, etc.  
  • Prevent bad customer experience. Promptly refunding charges before they show up on innocent cardholder statements builds trust and enhances customer relationships.

The Kount integration of Ethoca into our anti-fraud solution automates a number of steps in the Ethoca process to deliver huge operational efficiencies. Bottom line? More effective fraud prevention in a fraction of the time. How? Let’s look a little more closely how Ethoca works.

Before the new, enhanced integration, this discovery and reporting process could involve a number of manual steps that might require 5-10 minutes per transaction for a human agent to track down, take action and report on. But with the Kount integration of Ethoca, this time gets slashed to as little as one minute or less:

Dedicated Alert workflow to speed processing. Instead of human agents having to shuttle between different systems – Kount, card issuer, ordering, and Ethoca – everything can take place within Kount for faster, easier handling.

Auto-matching of the fraudulent transaction to other potentially-fraudulent transactions. Kount uses our powerful Integrated Link Analysis to assemble and highlight associated suspect transactions. Agents can quickly sort through the list to decline them, stop shipment and issue refunds to the cardholder.

Integrated VIP List management. Kount makes it easy to turn information into action. With two mouse clicks, the merchant can add attributes of the fraudulent transaction to their custom negative lists so future transactions will automatically be declined, or held for manual review.

Automated notifications to the Ethoca network. Feedback is required by Ethoca to optimize the effectiveness of the network. Kount automatically assembles reporting information to make feedback to Ethoca point-and-click simple. Merchants agree to provide feedback such as:

  • Did they match other transactions to the fraudulent transaction?
  • Did they refund the charge to the cardholder?
  • Where they able to stop shipment of the product?

Comprehensive reporting and analysis. Since Ethoca alerts are matched to transactions automatically, merchants can take advantage of rich data from confirmed fraudulent transactions to review, refine and improve their rules. You can add this to the list of ways the Kount Datamart helps establish a perfect view of your data to maximize productivity while ensuring system integrity and security.

In addition to better, less costly fraud prevention, there are also sales-enhancing benefits that come out of the enhanced Ethoca integration within Kount.

  • Merchants can approve riskier orders, knowing that if a transaction turns out to be fraudulent, the Ethoca “safety net” can help the merchant catch it before product ships. The result is higher order approval rates with less fraud and reduced chargebacks and product losses.
  • Higher issuer acceptance rates due to the reduction in chargebacks, leading to more orders and a better customer experience.

Want to know more about the enhanced integration of Ethoca within Kount? Contact your Kount Client Success Manager. Or if you use Ethoca, but not Kount, see a demonstration of how adding Kount can enhance your bottom line.