By Jason Howard

Who hasn’t looked at their bank statement at one point and thought, “wait a minute, what’s this transaction again?” And often, there isn’t enough information on our digital bank statements to help us make sense of our purchase history.

In most cases though, these confusing statement descriptors are perfectly legitimate purchases. But many of them can still result in cases of “friendly fraud” – where consumers claim valid transactions as fraud – that ultimately lead to a chargeback.

This is a particular problem now when more people are shopping online than ever before. In 2020 alone, consumers spent nearly $900B at online retailers largely due to the pandemic, and many of these newly formed digital shopping habits are expected to stay. With heightened online spending, consumers are increasingly relying on their digital bank channels to keep track of their purchases.

However, according to recent research, 77 percent of surveyed consumers report that they’re often unable to recognize transactions in their online statements, and 96 percent want more detailed information available in their digital banking application to help understand what they bought.

One of the key problems is that consumers often lack the information needed to help determine if a purchase was truly legitimate or not. So, to build trust throughout the entire shopping experience, it’s important consumers have the information they need to recognize their purchases, in the place they’re most often reviewing them – their digital bank statements. This enhanced consumer experience also benefits banks and merchants, helping to reduce unnecessary disputes and chargebacks caused by friendly fraud.

Solving the transaction confusion conundrum
Given that consumer shopping habits are changing and becoming increasingly digital, how can companies keep up and provide the right information and digital experience they need to protect themselves online?

‘Friendly fraud’ often occurs when a customer simply can’t recognize a purchase – but this can be solved by providing details like clear merchant names, logos, and even itemized digital receipts at the point a consumer may be questioning a charge.

Addressing customer’s questions upfront in this manner can also lead to a much better customer experience and reduction in fraud.

According to research, ‘friendly’ or accidental fraud accounts for 24 percent of all disputed charges, and the same study found that 73 percent of cardholders call their issuer first when they question a charge, with one in four dispute calls the result of confusion over statement descriptors.

Much of the reputational damage and cost to companies from friendly fraud could be prevented by simply making it easier to share key purchase details between merchants and financial institutions.

Meeting consumer expectations
Ever since the first branchless, all-online bank offering, the digital information consumers get on their transactions has been the same. You’ll find a name in block capitals, a date, and the charge itself (which could be a credit or debit). And while some merchant descriptors are easy enough to recognize, this isn’t always the case. This is especially a factor when the name showing up for a purchase is for a parent company, and not the shop where someone made the purchase itself.

Compare this to other parts of a consumer’s eCommerce and digital experience and you’ll see how it falls short. The companies that we interact with daily, from social media giants to car manufacturers, make huge efforts to make their ‘user interfaces’ (UIs) as intuitive as possible. Some of the leading eCommerce merchants continually innovate their UI, knowing it must provide enough information for customers new to online shopping while also catering to experienced users that will be put off by any handholding.

Breaking through digital noise, richer digital experience
Until recently, all digital bank experiences had similar statements, but with the rise of collaborative tools that help share key information between merchants and issuers, new options are opening up to provide users more in-depth purchase details right at their fingertips. Sharing additional purchase information in digital bank channels also poses a new opportunity for financial institutions and merchants alike to interact with their customers.

Breaking through the digital noise is critical for businesses looking to forge better connections with customers. Globally, consumers are receiving 6 billion texts and over 300 billion emails daily, making it more difficult than ever for brands to connect with their users in meaningful ways. Digital bank channels present a space where consumers are already deeply engaged, with over 50 percent of consumers globally now interacting with their bank through mobile apps or websites at least once a week. It’s also something merchants can begin leveraging easily through programs like Mastercard and Ethoca’s logo initiative, an easy and free way to get their clear merchant name and logo into digital bank statements.

The merchant logos will be linked to corresponding transactions, adding clear visual cues to help cardholders quickly identify legitimate purchases. It also means participating merchants are provided an opportunity to simultaneously extend their brand presence, as well as eliminate expensive and time-consuming chargebacks.

As businesses navigate an increasingly digital world, leveraging additional purchase information, in the right channels, at the right time, can help reduce cases of friendly fraud and chargebacks, and also open up new engagement channels with customers that create a better digital user experience.

Jason Howard is Executive Vice President, Ethoca and is responsible for the overall strategy and leadership involving collaborative technologies that aim to minimize chargebacks, friendly fraud and build better digital customer experiences.

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