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Online merchants and communities suffer very high rates of charge-backs when selling to young users. Here is how Plastyc delivers a charge-back-immune payment service.
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Patrice Peyret – CEO, Plastyc, Inc.
Reducing Charge Backsfor online purchases made by
teenagers and students
2
The Charge Backs Problem
with young users
Junior makes a purchase with a parent’s (or a friend’s) “borrowed”
credit card
Mom discovers the transaction after the facts and disputes it.
3
Typical sources of problems
Funds loading
Issuance
Funds mis-use
Repudiation of transactions
4000 GOODTHRU 03/1003/10 DEBIT
CARDHOLDER NAMECARDHOLDER NAME
40004000 00000000 00000000 00000000
4000 GOODTHRU 03/1003/10 DEBIT
CARDHOLDER NAMECARDHOLDER NAME
40004000 00000000 00000000 00000000
4
Tightening Issuance
Verify:– Consistency of [Name : Birth date : SSN]
– No match on OFAC list
of cardholder, or parent of minor cardholder
Out-sort manually user applications with low consistency scores or with OFAC hits
Verify physical address by sending prepaid card to billing address of funding credit card
(also avoids funding fraud)
5
Good Funding
From parent credit card– Use same billing address for parent credit
card and delivery of teen prepaid card
From parent banking account– Positive verification of account ownership
Parents have a separate online web access(from the teens) with their own username &
password
Plastyc takes liability for funding fraud => transactions done with disputed parental or other funding are not reversed
4000 GOODTHRU 03/1003/10 DEBIT
CARDHOLDER NAMECARDHOLDER NAME
40004000 00000000 00000000 00000000
6
Valid Purchases
If card is declared stolen or lost:– Plastyc implements Visa’s Zero Liability policy and covers any loss
from subsequent transactions
If card number is stolen and used in a card non-present transaction– Plastyc will not reverse the transaction if the online merchant has
linked its user namespace to Plastyc’s and provides usernames for disputed transactions
If online transaction is disputed by legitimate user– Plastyc will fight the repudiation if the online merchant has linked its
username space to Plastyc’s and provides usernames for disputed transactions
7
100% Cover for Partner Merchants
• Plastyc takes liability for the origin of funds:– No issuance to un-verified users– Funds from parents are indeed from parents– We don’t reverse purchases if funds are found to be disputed
• Plastyc takes liability for stolen/lost cards– Visa’s zero liability policy
• Plastyc takes liability for transactions with online partners:– If the namespaces between Plastyc and online merchants are
linked, then Plastyc will:• Fight repudiation with legitimate cards• Not reverse charges made with stolen card numbers
as long as online merchant confirms user ID with which the transactions were carried out