Mastercard’s First-Party Trust fights fraud for small businesses, enhancing transparency to prevent losses exceeding $100 million.
The Merchant Fraud Journal projected at the beginning of the year that first-party fraud would cost retailers more than $100 million. SMEs, or small and medium-sized enterprises, are the ones most affected by this. Mastercard has therefore unveiled its First-Party Trust initiative to safeguard businesses. The goal of the First-Party Trust programme is to increase transaction transparency by providing merchants with the means to report relevant information in order to prevent first-party fraud.
First-party fraud occurs when cardholders purposefully or inadvertently contest legitimate transactions. According to a recent Datos study, first-party fraud accounted for 75% of all fraud encountered by digital organisations. Given the current trend of rising global e-commerce, there is an urgent need for enhanced payment security and transparency. Merchants can share relevant insights to combat first-party fraud through the Mastercard First-Party Trust programme.
This is especially beneficial to SMEs because it helps them with problems that used to take a lot of time and resources. For instance, looking into and responding to claims. Compared to first-party fraud, issuers will be able to distinguish between fraudulent transactions involving third parties with greater accuracy. It will be able to discuss disputes with its cardholders with more trustworthy information.
“Mastercard is simplifying transactions for all parties involved and revolutionising the dispute experience with the First-Party Trust Programme. We’re happy to witness this major advancement. According to John Drechny, CEO of Merchant Advisory Group, “It strengthens trust as the cornerstone of the relationships between merchants and small businesses, issuers, acquirers, and most importantly, consumers.”
Improving the settlement of disputes
The First-Party Trust initiative is a global initiative that will begin in the US in 2024.
Mastercard will offer two channels via which a merchant and card issuer can exchange enhanced insights. The enhanced data can be sent directly by merchants as part of the transaction. Alternatively, as part of the dispute resolution procedure, they might do so after the transaction.
“Mastercard’s new initiative is a significant step in the fight against the abuse of the dispute resolution process. Our collaboration with Mastercard to create this service will be advantageous to all kinds of merchants, as seen by the input we have received from our large merchant membership base. According to Julie Fergerson, CEO of the Merchant Risk Council, “We look forward to continuing this partnership in the upcoming months to help transform the dispute experience and streamline transactions for everyone involved.”
Additionally, the programme will improve how these disagreements are resolved by offering:
- Using artificial intelligence (AI) and risk modelling, we can detect transactions that are truly fraudulent (also known as third-party fraud) and flag those that are most trustworthy.
- improved signals that give issuers more knowledge about the cardholder’s transaction history, device, delivery details, identity components, and location
- new guidelines for convincing evidence that will aid in identifying authentic purchases and avert needless, faulty disputes. These guidelines will also protect merchant chargebacks for disputes that satisfy the standards of First Party Trust data sharing.
Maintaining harmony between retailers and customers as digitalization picks up speed
“It has never been more crucial to lower transaction friction for the good of all parties involved as more and more of our spending occurs online. To improve the experience and lower risk for businesses, we are bringing our cutting-edge artificial intelligence, identity, and dispute resolution technology. Ajay Bhalla, president of cyber and intelligence at Mastercard, stated that “banks and merchants can retain trust with their most vital constituents: their customers” thanks to our technology.
“Digitalization has accelerated for businesses of all sizes, fostering innovative payment methods,” stated Linda Kirkpatrick, President of Mastercard North America. Encouraging the entire ecosystem to feel secure is crucial. Not to mention the appropriate equipment and technology to fight fraud and uphold the standards of consumer protection.
