Our (Slightly Biased) Predictions for 2021

It’s the start of the new year, and we at CB-ALERT decided that we either needed to make some new year’s resolutions or some predictions.

We tried making some resolutions and those lasted for about five minutes, so here are our predictions for 2021, with a little help from a recent article by Finextra.com.

For one thing, says Finextra, there will be fewer instances of fraud thanks to Strong Customer Authentication (SCA), which is an element of Payment Service Directive 2 (PSD2). SCA is forcing merchants and acquiring banks to have better transaction monitoring tools so they can detect unauthorized and fraudulent transactions.

Photo of a woman's face that has been overlaid with computer circuitry and other designs. We're making predictions for 2021, and this looked kind of futuristic.

We also think that the continued adoption of dynamic CVV2 (dCVV2) codes will help reduce the amount of card not present (CNP) fraud. The issue right now is that some merchants have begun storing static CVV2 codes on their sites. Using the dCVV2 codes, which are generated on a mobile app, can reduce fraud that comes from crooks who purchase stolen credit card numbers. Combine this with the growing use of SCA, and CNP fraud should start to take a dip.

Pre-dispute resolution will continue to grow. Finextra calls this “the next best ‘insurance policy’ for chargebacks.” For example, merchants can use automated pre-dispute resolution tools that use rules as set by the seller. If a customer disputes a purchase and says they didn’t receive the item, there were quality problems, or the order was fulfilled incorrectly, they can use the automated tools to handle part of the dispute process for them.

We also think it would help if sellers begin requiring returns of damaged and incorrect items. This will go a long way to reducing fraud since many fraudsters already lie about shipments arriving damaged or being the incorrect item. If they know a seller will just tell them to keep the item, they’ll call, lie about its condition, and then receive another new one. So, we believe (and hope) more merchants begin to ask for damaged and incorrect items to be returned.

We also predict that merchants will further reduce fraud by participating in Ethoca by Mastercard and CDRN/Order Insights by Verifi (a Visa company). We’ve written about these two programs in the past. They basically work by equipping issuing banks with information about the transactions between you and your customers. As your transaction information feeds into the Ethoca and CDRN systems, the banks’ customer service representatives can access it whenever a cardholder calls and disputes a transaction.

If they say they don’t recognize a charge, they never ordered an item, it never arrived or arrived damaged, or any other reason to dispute a charge, the customer service rep can immediately call up the transaction, relay the details to the cardholder, which will jog their memory about forgotten charges. They will also tell the customer they need to call the merchant if a shipment didn’t arrive or it arrived damaged. This will prevent chargeback double-dipping, which has recently been growing.

We believe that fuel merchants will miss the EMV compliance deadline again. (Quelle surprise!) The fuel merchants had an original deadline of October 2017, and that got pushed out twice to April 2021. But we’re not very optimistic that this will happen, since gas profits have dropped because of the pandemic and the cost of retrofitting is rather high. Look for that deadline to be pushed out to at least 2022.

For our final prediction, we’re really bullish on our chargeback fighting solution, CB-ALERT: We believe more merchants will use CB-ALERT to reduce their chargebacks. It’s an automated solution that helps spot fraud-related patterns in their transactions, including receiving lists of compromised credit cards from the credit card networks, which stops fraudulent purchases. It also spots other patterns like several cards being used by one shopper, or one shopper sending products to several different addresses.

If you’d like to learn more about the technologies in this article, especially CB-ALERT itself, visit the CB-ALERT website.

Photo credit: Geralt (Pixabay, Creative Commons 0)

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