Collaboration can help merchants and issuers.

• Position: Credit Cards

U.S. chargebacks will grow to nearly $6,000,000,000 this year, and it is projected that false declines will increase 25% within the next two years, indicates a report issued by Aite Group, Boston, Mass. The report's authors propose that merchants and credit card issuers can improve both metrics with better cooperation, data sharing, and communication. Chargebacks911, Tampa Bay, Fla., a dispute mitigation and risk management firm, urges merchants and issuers to heed the report's recommendations, emphasizing that collaboration and information sharing will magnify the impact of each player's own fraud-control and loss-prevention measures.

According to the report, chargebacks are rising drastically due to the EMV--Europay, MasterCard, Visa--liability shift. Between 60% and 70% of those chargebacks can be attributed to fraud, with the remainder resulting from service or support disputes. At the same time, many valid transactions are being declined when erroneously flagged as fraud. Aite Group says U.S. issuers will decline $264,000,000 in legitimate credit card transactions this year; by 2018, those false declines are expected to total $331,000,000.

"Chargebacks, fraud, and false declines are the bane of merchants and issuers alike," notes Monica Cardone, cofounder and chief operating officer of Chargebacks911. "Merchants often feel issuers enable friendly fraud by siding with customers in chargeback disputes, while issuers suggest merchants' processes and policies may be contributing to chargebacks and false declines. However, both parties can make much greater headway against these ongoing challenges by pooling their efforts and resources."

The Aite Group report identifies the types of data issuers and merchants each possess that can contribute to better-informed transaction decisions if shared. Issuers have access to cardholders' personally identifiable information, credit...