Trust is earned, and fostering public trust in any business venture must be built on a foundation of integrity and a sincere commitment to the best interests of your clients and the community at large
TAMPA, Fla. (PRWEB) May 16, 2023
Financial technology, commonly referred to as “fintech,” seeks to improve and automate the delivery and use of financial services through advanced solutions.(1) Sounds simple enough — until one goes down the rabbit hole of what products, services, and amorphous, shape-shifting technologies are tossed into the fintech mixture. There are mobile payments, consumer banking, payment gateways, insurance, blockchain, and cryptocurrency, to name a few.(2) Monica Eaton, Founder of Chargebacks911, makes the distinction that there are fintech companies that participate as money-movers and those that act as a channel or service providers. A delineation must be clearly defined before one becomes indistinguishable from the other; otherwise, they are lumped together without an eye toward the ethical implications of both.
Googling “What is fintech?” unleashes a vast array of examples in addition to the ones cited above — banking, payments, personal financial management, wealth management, lending, and embedded financial services, like store credit cards.(3) Fintech, as described generically thus far, and its current infiltration into the traditional banking industry has attempted to address consumer privacy and security concerns due to the intrinsic vulnerabilities of virtual finance. Data breaches, cybercrime, identity theft, and the buying and selling of consumers’ personal data are hallmarks of the 21st-century cybersecurity hazards of online and app-driven financial transactions.
A recent U.S. Department of the Treasury report acknowledges the benefits of fintech and calls for additional oversight to mitigate the inherent dangers of this emerging technology to protect consumers and prevent fraud and abuse.(4) Fintech companies involved in the movement of money are regulated as financial institutions on both federal and state levels, which sometimes clash when federal regulations trump the states’. Inconsistent regulations and the struggle to keep up with the quickly evolving transmutations in the fintech industry make it more difficult to identify and indict fraudulent activity.(5)
Interestingly, despite the fact that 81% of people have their primary banking account linked to some type of fintech tool, according to a Mastercard study, 86% don’t really trust fintech when it comes to protecting their financial data.(6) But convenience wins the day.
So, where do fintech service providers fit in? As Eaton points out, fintech specialists have yet to be clearly differentiated in their role in this crowded field of financial institutions. Fintech companies provide services or software-as-a-service (SaaS) to either fintech companies or financial institutions that are moving all of that money around in the virtual ecosphere. It’s a lot to keep track of. SaaS providers like Chargebacks911 exist to unburden companies that are vulnerable to the pitfalls of using fintech in their business operations and don’t have the resources to manually scrutinize the transactions that are taking place at lightning speed. eCommerce merchants are losing billions of dollars, over $48 billion annually, and chalking it up as the cost of doing business in cyberspace.
For Eaton, Chargebacks911 is the realization of the obligation to principled business practices that protect the interests of its eCommerce clients and their customers. As a fintech service provider, Chargebacks911’s mission is to give clients intelligent and efficient solutions that aid stakeholders who are suffering the consequences of ongoing rule changes and complex workflows that plague the chargeback process. Chargebacks911 and its sister brand Fi911 provide configurable solutions built for scale and scope.
There are three primary challenges the fintech industry faces with chargebacks threatening the integrity of the system and contributing risk to the sustainability of consumer protection: 1) The growing amount of required data connections, 2) The expanding requirements and mandates of related data exchange both between banks and their customers, and 3) The lack of data agility necessary to cope with the evolving rules, policies, and privacy laws.
The lack of universal standards and technology-guided consumer expectations continues to widen the opportunity for chargeback fraud, also known as friendly fraud. Unfortunately, the foundation becomes imbalanced without resolving all three challenges for the fintech industry, and integrity is compromised. Consumers are on high alert when it comes to internet scams and fraud. Addressing consumers’ wants and needs is paramount to continuing the eCommerce and subsequent fintech growth trajectories.
As a consequence of digitization, innocent eCommerce vendors can become a target of misplaced paranoia. For example, customers may transact with an online merchant. When the credit card bill arrives, they might forget the transaction or not recognize the name of the company they purchased goods or services from — a common and growing occurrence due to the speed of innovation and technological developments.
One of the most common pitfalls is the adoption of the “one-click checkout.” It masterfully delivers on-demand needs but contributes equal but opposite fallout to consumers with little to no consideration of any counterbalance for merchants. Virtually all accountability for the consumer is removed in the process. Couple this with a one-click transaction dispute process, and the aftermath spirals out of control, with merchants left bearing all the consequences.
In an abundance of caution, consumers liaise through their financial institution to negate the contract of sale and get their money returned, known as a chargeback, with few or no questions asked. A frictionless process is expected here as well, but consumers aren’t made aware of what actually happens behind the scenes — not realizing that bypassing the retailer altogether results in a growing financial pain point for every party in the payment chain. Oftentimes, it’s an honest mistake, but one with the unintended consequence of denying a legitimate business its legitimately earned profit. And while the retailer and their bank have the opportunity to contest the claim, the cost for this exercise is often prohibitive, causing banks and retailers to write off the false accusation — unintentionally rewarding a dangerous behavior.
In this example, like so many that plague the financial industry, the lack of data existence, understanding, and context serves to propel these negative statistics. As we have seen over the last decade, and especially with a catalyst like COVID-19, friendly fraud transforms from innocent to intentional — a faceless, virtual crime that includes no consequence, penalty, or monitoring for malicious customers. Today, this type of online shoplifting is not only permitted; for all intents and purposes, it is considered legal — it is advocated by banks under significant pressure by regulators, uninformed of the structural changes that impact the digital age, operating with legacy mindsets hinged on a system that was built to support commerce in the 1970s.
Eaton comments, “There’s a huge trust issue on both sides, motivated by dated policies and regulations that have failed to keep pace with changing times.” As we’ve seen with the skyrocketing growth of first-party fraud and misuse — due to the ease of contacting one’s bank to dispute a purchase and receive a refund with little or no explanation or pushback — many other areas of the ecosystem are at risk of being exploited as well. AI tools and smart technologies such as ChatGPT may be the next disrupter as technological innovation continues to surge.
The task of retrofitting the new world around legacy mindsets mired in the past has a track record of failure. Still, it continues to remain unaddressed due to fragmentation that muddies the waters. Resolving these challenges and rehabilitating trust in the system requires stakeholder collaboration, mass digitization, and backward-compatible solutions that provide clear and fair governance for all stakeholders in accordance with their role in commerce.
Negative customer experiences result in a 91% customer dropout rate.(7) With more and more people airing their frustrations online, providing exceptional and personalized customer encounters is more important than ever. Automated customer service phone lines — press one, press seven, press nine, and then back to one — can exacerbate customer dissatisfaction with a company.
Eaton has some tips: Ensure contact information is easily visible and the interaction with automated services is user-friendly; be empathetic toward your customer’s complaint; elicit feedback and learn from it; demonstrate appreciation for your customers by providing rewards and other incentives; personalize the experience; be transparent; and always follow up.(8)
Eaton is a vocal proponent of ethical business practices and accountability, emphasizing, “Trust is earned, and fostering public trust in any business venture must be built on a foundation of integrity and a sincere commitment to the best interests of your clients and the community at large.”
About Monica Eaton
As an acclaimed entrepreneur, speaker, and author, Monica Eaton is widely recognized as a thought leader in the FinTech industry and a champion of women in technology. She established her entrepreneurial credentials upon selling her first business at the age of 19. When a subsequent eCommerce venture was plagued by revenue-leeching chargebacks and fraud, Eaton rose to the challenge by developing a robust solution that combined human insight and agile technology. Today, her innovations are used by thousands of companies worldwide, cementing her reputation as one of the payment industry’s foremost experts in remediation management, chargeback management, and fraud prevention. Monica Eaton is honored to be the recipient of various industry awards. Her own expertise, as well as the services provided by her companies, has been recognized as outstanding by her peers and other industry leaders. Visit http://www.monicaec.com.
References:
1. Kagan, J. (2023, March 9). Financial Technology (Fintech): Its uses and impact on our lives. Investopedia. Retrieved April 21, 2023, from investopedia.com/terms/f/fintech.asp
2. Howell, J. (2023, March 14). Financial Technology (FinTech) – uses and examples. 101 Blockchains. Retrieved April 21, 2023, from 101blockchains.com/fintech-examples/
3. Trificana, J. (2022, October 3). What is Fintech? 6 main types of fintech, and how they work. Plaid. Retrieved April 21, 2023, from plaid.com/resources/fintech/what-is-fintech/
4. New Treasury Report shows fintech industry requires additional oversight to close gaps, prevent abuses and protect consumers. U.S. Department of the Treasury. (2022, November 16). Retrieved April 21, 2023, from home.treasury.gov/news/press-releases/jy1105
5. Global Legal Group. (n.d.). Fintech laws and regulations: USA: GLI. GLI – Global Legal Insights – International legal business solutions. Retrieved April 21, 2023, from globallegalinsights.com/practice-areas/Fintech-laws-and-regulations/usa#:~:text=FintFech%2C%20like%20all%20financial%20services,and%20providers%20of%20financial%20services
6. Reich, G. (2022, April 9). Data reveals that people don’t trust open banking or FINTECHS, but use both. The Financial Brand. Retrieved April 21, 2023, from thefinancialbrand.com/news/open-banking/new-data-people-dont-trust-open-banking-or-fintechs-but-use-both-127722/
7. Counting the customer – glance networks. (n.d.). Retrieved April 21, 2023, from 2.glance.net/wp-content/uploads/2015/07/Counting-the-customer_-Glance_eBook-4.pdf
8. The top 12 customer service best practices to adopt in 2023. Chargebacks911. (2023, March 9). Retrieved April 21, 2023, from chargebacks911.com/customer-service-best-practices/
