Eighty percent of surveyed business owners would be interested in instant funds transfer, and 80 percent of these owners would be willing to pay a fee for faster payment. Loss prevention specialist Chargebacks911 cautions that as payment speed increases, so will the possibility of fraud.
(Tampa Bay, FL) June 17, 2019—In a recent survey of business owners by Aite Group, 80 percent of respondents indicated that they would be interested in instant funding from acquirers and lenders, and 80 percent of those businesses would be willing to pay a fee for faster payments. In addition, 85 percent indicated that they would change acquirer relationships, i.e. the companies whose credit cards they accept, if another merchant acquirer offered instant funding of card receipts.1 Chargebacks911, a leading dispute mitigation and loss prevention firm, applauds the ability of faster payments to improve merchants’ cash flow, but notes that increased transaction speed brings along with it the increased potential for fraud.
A major driver for real-time payments is not eCommerce but the gig economy, which encompasses everything from ride- and house-sharing to pet sitting and at-home coding. According to a new study by Mastercard, the global gig economy generated an estimated $204 billion in 2018; the market is expected to grow to $455.2 billion by year-end 2023.1 The major credit card companies have been quick to respond to this opportunity. In late 2018, Visa began to provide real-time payment services to courier service Postmates through Visa Direct. Mastercard is offering Visa Direct alternative Mastercard Send, and PayPal has acquired gig economy specialist Hyperwallet. American Express and Square are also said to be developing B2B payment solutions.2
Meanwhile, the Federal Reserve has proposed creating its own real-time payment service, which would facilitate 24/7/365 interbank settlements of faster payments and serve as a liquidity tool to support transfer between Federal Reserve accounts. Support for the plan has been voiced by major retailers, community banks and credit unions, and tech companies such as Amazon, Apple, PayPal, and Google. Many big banks, however, have disagreed with the proposal, as has the Heritage Foundation. The Fed has not yet announced its final plans.3
Questions have also been raised as to both the need for, and the security of, real-time payment systems. In an investors conference at the end of May, Visa CEO Al Kelly commented that he does not see a robust consumer need for payments faster than the current card networks or settlement platforms. He also noted that real-time payment systems often lack the ability to revoke funds if money is sent to the wrong person or goods are not delivered as promised. Disputes and chargebacks, he pointed out, will be extremely difficult to deal with.4
“Although merchants will be pleased at first because of the initial speed of transaction,” commented Monica Eaton-Cardone, co-founder and chief operating officer (COO) of Chargebacks911, “the real hurdle with real-time payments will be reduced trust and fraud. There is currently no universal method for challenging a transaction, obtaining a refund for goods not received, or claiming back funds remitted against fraud. Until we have a consistent set of guidelines for how to handle fraud and chargebacks that is standardized across the marketplace, adoption rates are predicted to wane – despite merchant’s incentive for reduced processing fees.”
Chargebacks911 is dedicated to educating and supporting eCommerce merchants with services designed to boost revenue, shrink chargebacks and defeat fraud. To that end, Monica Eaton-Cardone and her team will be participating in a number of upcoming industry events, including Chargeback University in Los Angeles, Toronto, and London, and IRCE at RetailX in Chicago. For details on Chargebacks911’s comprehensive risk management solutions, informative articles and other merchant resources, visit https://chargebacks911.com
About Chargebacks911/The Chargebacks Company
Chargebacks911 empowers businesses to combat constantly evolving fraud tactics and mounting customer disputes that directly threaten profitability. Operating as The Chargeback Company in Europe, Chargebacks911 has pioneered effective, industry-leading solutions designed to reduce chargeback fraud, alleviate processing costs, mitigate risk and recover revenues.
The company’s unparalleled expertise and proprietary technology have earned three consecutive CNP Customer Choice Awards for Best Chargeback Management Solution, three successive AI Lions’ Den Awards for Best Airline Industry Solution, and Gold and Silver Stevie Awards from the American Business Awards (ABA). With innovative and highly scalable services ranging from Intelligence Source Detection™ (ISD) to Tactical Representment, Chargebacks911 uncovers the true source of chargebacks, battles unjustified disputes, rescues lost revenue, safeguards reputations, and defends against relentless, ever-changing cyberthreats.
Murphy, Patti, “Faster payments landscape emerging,” The Green Sheet, May 27, 2019.
Larkin, Michael, “Visa Teams Up with Gig Economy Giant Postmates for Instant Pay,” Investor’s Business Daily, October 3, 2018.
“Deep Dive: Weighing the Federal Reserve’s Faster Payments Proposal,” PYMNTS, February 4, 2019.
Adams, John, “Visa CEO welcomes big payments M&A with open arms,” PaymentsSource, April 25, 2019.
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Karla Jo Helms