PORTLAND, Ore., March 8, 2017 /PRNewswire/ -- Nearly a third (30 percent) of all transactions declined due to suspected fraud are believed to be legitimate, according to a new eBook from Vesta Corporation, a global leader in integrated risk and payment solutions. These "false positives" occur when merchant fraud control systems are tuned so tightly that they unintentionally block legitimate shopping activity.
"False positives are undetected sales killers that pose serious threats to merchants' revenue," said Vesta Chief Marketing Officer Tom Byrnes. "In many ways, they're worse than outright fraudulent transactions because of their immeasurable negative impacts to the customer experience and customer loyalty."
A recent Javelin Strategy & Research and Vesta Corporation study revealed that merchants dedicated more of their operational costs to fighting and managing fraud in 2016 than ever before, as fraud management costs now consume 14.9 to 23 percent of merchants' operational budgets. Among those costs and losses, dollars lost to false positives eclipse the dollars lost to another revenue-eater—chargebacks—by more than five to one. Merchants are losing 2.79 percent of their revenue to false positives but just 0.52 percent to chargebacks.
Merchants specializing in digital goods, like eTickets, eBooks and music downloads, are more vulnerable to these false positives than those selling physical goods because of the need to send products out the door to buyers almost instantaneously. Merchants selling a mix of digital and physical goods lose 3.35 percent of annual revenue to false positives, while those selling strictly physical goods lose just 1.81 percent.
"The challenge for merchants lies in keeping transactions quick and convenient for customers while maintaining strong anti-fraud measures to protect revenue," explained Vesta Chief Operating Officer Tracy Metzger.
About Vesta Corporation
Vesta Corporation is the only global provider of integrated fraud and payment solutions for enterprise partners in the ecommerce, telecom, digital goods, media and financial industries. The company's guaranteed CNP payment solutions and innovative, patented fraud technology are proven to increase conversion and acceptance while eliminating fraudulent transactions and merchant liability. Vesta holds multiple patents and has been recognized as a leading innovator in payment technologies. Founded in 1995 and headquartered in Portland, OR, Vesta's operations span the Americas, Europe and Asia.
Communications Strategy Group, on behalf of Vesta Corporation
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SOURCE Vesta Corporation