TSYS, Ethoca target card-not-present fraud

Regulation must become automated

TSYS – aka the US-based credit card processor Total System Services – is teaming up with Ethoca, which provides collaboration-based technology for card issuers and e-commerce merchants to prevent card-not-present (CNP) fraud, recover lost revenue and eliminate chargebacks.

The agreement between the two companies provides for the launch of the TSYS transaction recovery network, powered by Ethoca, offering near real-time notification of confirmed fraud so that issuers and online merchants can quickly recover lost revenue and eliminate the need for expensive and time-consuming chargeback processes.

“With the continued growth of e-commerce payments and the anticipated rise in CNP fraud, efficient collaboration between issuing banks and merchants is crucial to help mitigate risk and improve the cardholder experience,” said Andrew Mathieson, group executive at TSYS. “The TSYS transaction recovery network enables a collaborative efficiency that reduces online fraud and operational expenses associated with chargebacks.”

TSYS says that the chargeback mitigation solution uses a simple and effective process that allows speed to market and ease of integration for financial institutions. TSYS provides the connection to automatically deliver confirmed fraud data from the issuer to Ethoca in near real time.

In turn, Ethoca passes confirmed cases of card fraud across a large, global merchant network to recover funds via transaction reversal or refund, negating the need for the issuer to initiate a chargeback. The process allows fraudulent transactions to be remedied quickly,and save time and costs, while creating a vastly improved experience for cardholders inconvenienced by fraud.

“AITE Group is predicting US card issuer CNP losses will reach US$6.4bn by 2018, in large part due to the post-Europay, Mastercard and Visa (EMV) shift in fraud from card present to CNP channels,” said Trevor Clarke, executive vice president (EVP) of issuer relations and co-founder at Ethoca.

“With TSYS’ transaction recovery network, collaboration between card issuers and merchants will now be available to TSYS card issuers worldwide. Through this initiative, we’re executing on a shared vision: helping card issuers find more efficient and cardholder-friendly ways to combat the costly, damaging effects of fraud and chargebacks.”

Ethoca adds that its global network is the world’s largest collaboration network of its kind, having enrolled thousands of merchants across five continents, and hundreds of issuers of all sizes.

According to Ethoca results, issuers who have adopted this technology have seen an average fraud mitigation rate of up to 65%, up to 84% resolution rate with highly disputed merchants, up to 75% recovery rate on low-value transactions that would otherwise be written off, and up to 40% recovery rate on 3D Secure losses.

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