Did you know that all Ethoca and Mastercard chargeback and dispute solutions are available through ChargebackHelp? This makes us a one-stop-shop for all merchant chargeback prevention needs!
Ethoca is a subsidiary of Mastercard, and the company offers a variety of tools for fighting chargebacks and preventing friendly fraud (also referred to as first-party fraud). With Consumer Clarity, merchants can provide additional transaction information to both consumers and card issuers. The right details can jog the cardholder’s memory, and if they or their card issuer realize the purchase was legitimate, it can prevent chargebacks from being filed.
Chargebacks owing to confusion are a huge risk. An online survey by Datos Insight found that half of consumers had questioned a purchase in the prior 12 months, and about a quarter of consumers did so because they didn’t recognize the details on their card statements. Visa, meanwhile, found that roughly 3 million chargebacks were due to transaction confusion. While at first glance this data may seem rather dour, it offers a silver lining: By increasing clarity, merchants, card issuers, and card networks can greatly reduce chargebacks and resolve disputes without having to go through the representment process.
Chargebacks are more than a hassle and can result in expensive fees, rising processing costs, wasted labor, lost inventory, and more. In some situations, disputes could even become an existential threat and merchants risk being dropped by payment processors. Reducing confusion and increasing customer clarity can reduce chargebacks and protect your business.
A Quick Look at When and How Customer Confusion Can Crop Up
The road to transaction confusion often starts when a cardholder scans through their credit card statement and comes across a transaction they don’t recognize. The lack of recognition may be due to many different things, including vague billing descriptors, such as a product ID or merchant name that the cardholder doesn’t recognize.
Let’s say that a customer visits an online shoe store – Tom’s Amazing Acme Shoes – and orders a pair of hiking boots. A few weeks later, the customer gets their credit card statement and sees a transaction with “Thomas Holding Company” for “merchandise.” The customer has no idea who Thomas Holding Company is and “merchandise” is too vague to jog the customer’s memory.
Fearing that they were scammed, the customer could call their bank and request a chargeback. Traditionally, the bank would move forward with the chargeback and the merchant would end up hit with chargeback fees and other penalties all because of a simple mix-up. These days, tools like Ethoca’s Consumer Clarity can resolve misunderstandings before a chargeback is filed.
Ethoca’s Consumer Clarity Briefly Explained
Ethoca’s Consumer Clarity tool is designed specifically to clear up confusion over transactions by providing additional information to both card issuers and cardholders. Ethoca and card issuers do not store sensitive merchant information, but instead simply transmit data, which helps maintain privacy. Unfortunately, it means they often have no more insight into an individual transaction than the consumer does.
When a card issuer or cardholder looks up a transaction, Ethoca can obtain information from the merchant and then provide it to the inquiring party. This way, it’s possible to head off a potential transaction inquiry or dispute before it becomes a chargeback.
Let’s take a closer look at how Consumer Clarity works from the point of view of both the card issuer and the cardholder.
Consumer Clarity for Cardholders
Consumer Clarity can provide transaction information directly to cardholders through their digital banking app or online portal. Instead of vague billing descriptors, consumers can be provided with:
- The merchant’s name, logo, and other identifying information.
- An itemized list breaking down what was bought and the cost of each item (essentially a digital receipt)
- Contact information so the customer can contact the merchant before contacting their issuers.
The last point is especially important because half of customers will contact their bank first rather than a merchant when there is confusion over a charge. By providing contact information, merchants increase the likelihood that they’ll be contacted first, which will provide them with an opportunity to resolve a dispute before the issuer is even looped in.
Consumer Clarity also offers subscription controls. Cardholders can use these controls to easily cancel a subscription from their digital banking app. In practice, subscriptions are a leading source of chargebacks.
Consumer Clarity For Card Issuers
In the past, it was difficult, if not impossible, for a merchant and card issuer to communicate before a chargeback was filed. In practice, this meant that if a customer was reaching out due to simple confusion, things often weren’t cleared up before the chargeback became official.
Consumer Clarity allows the card issuer to obtain information on a transaction before a chargeback is filed and without needing to contact the merchant. The issuer’s staff can access data quickly and then they can provide the details to the cardholder. If the cardholder recognizes the purchase, there’s no need to move forward with a chargeback.
Consumer Clarity Key Benefits
Consumer Clarity offers benefits for consumers, merchants, and card issuers.
For merchants:
- Chargebacks are prevented, thus preventing chargeback fees and a rising chargeback ratio.
- Saves labor power that would have been spent managing chargebacks and disputes.
- Customer satisfaction and customer loyalty may both rise.
- Communication between customers and merchants increases.
For Card Issuers:
- Cardholder satisfaction and loyalty are safeguarded.
- Operating costs are lowered and labor power is conserved.
- Merchants and customers alike may exhibit increased trust in the issuer.
- Value-added features, like detailed digital receipts, and increased ease of use can attract new clients.
- Can reduce call center call volumes by 25%
For Cardholders
- Confusion is cleared up quickly, reducing anxiety.
- Easier to track purchases and understand personal finances and spending habits.
- Reduce the risk of genuine fraud going unnoticed.
- Saves time and the hassles of contacting the issuer.
- Make managing subscriptions easy.
The above points aren’t exhaustive. In practice, Consumer Clarity is one of the most powerful options for preventing chargebacks. Merchants can further supercharge the results by using the tools provided by ChargebackHelp, which make Consumer Clarity and other tools easier to manage and leverage.
Does Visa Offer Similar Tools?
Ethoca is a subsidiary of Mastercard, and currently, Consumer Clarity works only with Mastercard transactions. Visa’s own subsidiary, Verifi, offers “Order Insight”, which provides similar chargeback prevention features and is designed to reduce confusion while increasing transparency and communication.
Harmonize and Optimize With ChargebackHelp’s Deflect Platform
Both Ethoca Consumer Clarity and Verifi Order Insight are powerful tools for preventing chargebacks and disputes. However, many merchants find that it’s difficult and cumbersome to manage both tools at the same time. In practice, this can result in lower adoption rates and thus more chargebacks than necessary.
DEFLECT integrates both Consumer Clarity and Order Insight into one simple and intuitive portal and offers additional easy-to-use features that can help merchants deflect and prevent chargebacks. We also provide other tools that can increase the odds of winning disputes if they can’t be prevented.
By preventing chargebacks when and where possible, and successfully disputing them when they can’t be avoided, merchants can safeguard their interests and keep costs low. Those merchants who fail to mitigate chargebacks may suffer higher operating costs that could put them at a serious competitive disadvantage.