Innovation in Post-Authorization

Rick Lynch is the senior vice president for business development at Verifi. He got into the payments industry in 1999, and has been innovating in the space ever since. We sat down with Rick on this week’s episode of Payments Innovation to learn more about what Verifi is doing to shake up the industry and equip business owners to take control of their chargebacks. 

How Does Verifi Differentiate From The Rest of The Market? 

Rick: There are a lot of different solution providers out there, so it’s easy for our company to get lumped into that fraud and chargeback management/solution category. While we’re definitely in that category, I think the key delineation is pre-authorization tools vs post-authorization tools. 

Verifi is very focused on helping reduce risk and loses after the sale by preventing and fighting chargebacks, preventing customer disputes, and any other negative events that happen after the sale. Most of the vendors you see in the marketplace today are really focused on before-the-sale, which is a crowded market. 

It was only over time in talking to our customers, and I would really emphasize the importance of that, that we were able to figure out what our products should be today.

Was There a Specific Challenge Your Team Wanted to Tackle When You Started? 

Rick: We noticed a big challenge in the market. What merchants really wanted was a single vendor that would help them address a wide spectrum of needs. One person for all things. And that’s where we were unique. We offered a payment gateway, payment consulting, chargeback prevention and analysis, chargeback dispute management, IPG location, and so many other tools. 

We were able to give these merchants expertise in a variety of areas but in one relationship. And then over time, in listening to our customers needs and wants, we were able to figure out what our products should be. Today, we primarily work with card-not-present merchants and omni channel merchants. 

These merchants really just wanted some expertise in one relationship.

– Rick Lynch

What Positive or Negative Trends Have You Seen?

Rick: We have seen the volume of disputes grow substantially month over month and year over year. That’s happening because of the migration of consumers who buy in a card-not-present space. Over time, consumers have gotten more comfortable with this method.

When you think about it, 15 years ago, nobody bought a pair of shoes online. They didn’t like the idea of not going into the store and trying those shoes on. But, as we all know, it’s not like that anymore. People will buy anything at the drop of a hat on their cell phone. It’s a major change in terms of consumer behavior. 

Another trend we’re seeing more is the friendly fraud or customer service related disputes. And I don’t necessarily want to call it fraud. Often times customers are just confused about a charge they see on their bank statement so they call their bank only to find out later that it was a valid purchase or a different family member made the charge. So those are driving up dispute counts for merchants when in fact the merchant hasn’t done anything wrong.

We’ve seen a massive amount of effort over the last 15-20 years to make the purchasing process as easy as possible for the consumer. Today, you can buy anything from around the world on your mobile phone and it will be at your door in a few days. On the flip side, the dispute side of transactions is still in the stone age. It can still take anywhere from four to six months for the old dispute process to run its course; it’s costly, it’s time-consuming, and it still involves fax machines.

And that’s really what we’re here for, to bring that process into the modern age where it can happen in real time. I think, in the next five years, you’ll see those disputes get resolved in real-time in a matter of seconds.

We also want to help those small business owners who don’t know what to do with chargebacks. If you’re a business owner, and you don’t get chargebacks frequently (maybe you get one or two a year), when you get that chargeback, you’re not really sure what information you need to provide to respond. 

And oftentimes, the resources that would help you learn what you need to respond to chargebacks are difficult to obtain. It can be complicated because the rules are different for each card brand and the data you need to provide is often information that a typical business owner isn’t aware of. Not to mention the data is challenging to get a hold of. 

A shocking statistic I heard was that 90% or more of chargebacks just go unresponded to, and one of the main reasons is that merchants/business owners don’t know where to start.

Thanks to innovation from companies like Verifi, we’ll hopefully see that percentage decrease over time.

This blog is based on an interview with Rick Lynch, the Senior Vice President for Business Development at Verifi.  You can here the entire episode by clicking here.