Is blockchain technology the way to fight chargebacks and chargeback fraud for ecommerce retailers? This is a question that is becoming more important as we look for ways to secure ecommerce transaction which continue to grow exponentially each year. With more transactions, the likelihood of increasing the number of chargebacks, including fraudulent claims, increases, but is blockchain the answer?
Some have hailed the emergence of blockchain technology as a way to secure ecommerce transactions in a time where massive breaches have exposed countless individuals to cyber criminals. However, before we put all of our eggs in the blockchain basket, we need to examine if the technology is ready to protect merchants from chargebacks and fraud.
Again, the data breaches have cause great stress on ecommerce and card-not-present merchants because when credit card data gets out into the open, the resulting unauthorized use drives cardholders to file chargebacks, adding cost and time on top of the damage done by the initial breach.
Blockchain, which is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that any involved record cannot be altered retroactively, can actually be an asset in preventing identity theft and cardholder information from being stolen because it can be difficult to extract that data from a blockchain system.
How this relates to the major culprits merchants have to do with regarding chargebacks – true fraud and friendly fraud?
For true fraud, blockchain may play a role in preventing this from occurring because most true fraud comes from stolen credit cards or identity theft. Again, since blockchain can provide security for card holder data, it means that there is a possibility that chargebacks resulting from true fraud and identity theft can be slowed. Also, when a blockchain payment system is in place it creates a wall that prevents customer data from being stolen, thus reducing opportunities for true fraud, which is a welcoming advancement for merchants.
Going forward, however, we are going to see a lot of exciting developments in blockchain technology, but as of now, we have barely scratched…