Recent worldwide events have ushered in the unprecedented development of the e-commerce industry. Unfortunately, payment fraud is still an issue for online purchases— Particularly for small businesses.
Let's explore everything you should keep in mind when it comes to the cost of fraud for your company. In this article, we'll look at the four key costs of fraud imposed on small businesses:
Under most circumstances, it can cost a significant amount of unnecessary time to deal with an incident of fraud.
This is particularly true if the fraud occurred on a large scale. For example, even a single individual could use multiple compromised payment methods to make a large number of fraudulent purchases within a short amount of time.
This will directly impact your company's overall productivity and cause you to miss out on potential revenue.
Small businesses will also suffer from chargebacks during instances of fraud. Not only will you be required to pay the amount that was fraudulently used for a purchase, but you also be responsible for a fee of up to $100.
As you can tell, dealing with fraud can quickly become very expensive.
Unfortunately, your business will also still be responsible for card processing fees. This is true even if a credit card dispute has been resolved in your favor.
To elaborate, let's assume that a customer made a fraudulent purchase from an online clothing brand. The owner of the business disputes this purchase and is able to prove that the activity was fraudulent.
Although the situation is then resolved and their favor, they don't receive compensation for their for the card processing fee they had already been charged for.
Combined with chargebacks, these fees can easily be overwhelming for smaller businesses that have limited resources. So, implementing comprehensive fraud protection is always a worthy investment.
Unfortunately, it's relatively easy to develop a negative reputation when fraud is involved. This also tends to have two separate effects:
To elaborate on this second point, many people become worried when they hear the word 'fraud' associated with a particular business. This is a direct result of scenarios like the Equifax breach, which led to many people skeptical about the safety of managing and spending money online.
They might also worry that their transactions will take longer than normal due to increased fraud prevention efforts. So, this could end up being a dealbreaker for those who were on the fence about whether or not they wanted to make a purchase from your brand.
But the above information will make the process far smoother. From here, you’ll be able to understand the cost of fraud as much as you should and take the appropriate measures to help prevent it.
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