What is a fraudulent transaction
A fraudulent transaction is a payment card transaction that was not authorised by the cardholder. Such a transaction arises when card details are misused by an unauthorised person, or when a lost or stolen payment card is used for a purchase.
How to recognise a fraudulent transaction
A transaction may be fraudulent if it meets one or more risk parameters:
a high-value order from a new customer;
an order containing several variants of the same type of goods;
an order consisting of an expensive, easily resold item;
an order with express delivery, or an order placed late at night;
several orders with a single delivery address;
a freemail address used for the order;
an order with an unusual delivery address.
If an order looks questionable at first sight, it is likely to be a fraudulent transaction. How to proceed in that situation is described below in “Do you suspect a fraudulent transaction?”.
What is a chargeback
A chargeback is a request to return a payment made by payment card. It is raised by the cardholder, who disputes the legitimacy of the transaction. A chargeback can arise regardless of the type of goods you offer.
The most common reasons for a chargeback
We usually encounter the following causes leading to a chargeback:
technical issues (duplicate payment, technical problems during payment);
a customer complaint (goods or services were not delivered, delayed delivery, the customer received different goods than ordered, incorrect dispatch);
payment card misuse (a fraudulent transaction).
What is the difference between fraud and a chargeback
Fraud is a notification that the cardholder did not make the transaction or does not recognise it. A chargeback is a customer dispute and has a financial impact – a fee applies according to the current fee schedule.
Preventing fraud and chargebacks
If your merchant outlet accepts payment cards, you need to pay attention to preventing fraudulent transactions and chargebacks.
Prevention matters for several reasons:
if a chargeback is not successfully disputed, the funds for the order that you received into your business account are debited back to the cardholder's card;
a fee is associated with each chargeback;
card schemes monitor the number of fraudulent transactions and chargebacks at individual merchant outlets.
Fortunately, these situations can be prevented.
Fraudulent transactions can be prevented, for example, by checking orders with risk parameters more thoroughly before dispatch (where the nature of your product allows it), or by setting up one of the security measures on the payment gateway, such as limiting card acceptance to selected regions or capping the maximum payment amount. For specific settings, please contact your account manager.
You can minimise the risk of a chargeback by providing detailed information and showing product details on your website, by setting reasonable delivery times, by delivering reliably, by providing good customer support and by handling customer complaints quickly and carefully. Always keep the contact details on your merchant outlet up to date. Last but not least, clearly placed, understandable and unambiguous general terms and conditions are important, including your complaints and cancellation terms. The customer must agree to these terms, and this must be recorded – for example with a checkbox that the customer ticks before submitting and paying for the order. A link to the relevant terms must also be included.
Do you suspect a fraudulent transaction?
If a transaction looks suspicious, the best way to start checking is to call the customer and at the same time verify that their address exists. If in doubt, you can suggest another payment method (cash on delivery, bank transfer). You can also contact us at: [email protected]. If you decide to return the payment to the cardholder's card, you should do so as soon as possible, so that a chargeback does not arise in the meantime.
💡 GoPay tip: You can prevent a chargeback by returning the payment using the original payment method, i.e. by issuing a refund from your business account in the GoPay payment system. Instructions on how to return a payment correctly are available HERE.