RoadSync
RoadSync is a business management platform for warehouse and tow-truck companies. The RoadSync Checkout product allows users to accept payment by credit card and other methods.
The Challenge: High chargeback rates due to friendly fraud and card cashing
Higher chargeback rates are prevalent in the transportation vertical. This happens for two reasons.
First, “friendly fraud” (when an authorized cardholder deliberately initiates a false chargeback) tends to be more common in situations where customers don’t have long-term relationships with merchants. This is the case with towing. Customers are unlikely to claim that their payment to their dentist was fraudulent, because they see their dentist twice every year for years on end. But the same customer only calls a towing company once every several years, and maybe a different towing company every time. Without a personal connection, customers tend to feel less guilt and shame around claiming that the payment was fraudulent. This contributes to higher rates of friendly fraud.
Second, some adjacent services – such as used tire sales – are frequent targets for “card cashing”. Because used tires are easy to sell for cash, but difficult to trace, bad actors will often use stolen credit card numbers to purchase used tires. When the authorized cardholder realizes their card was stolen and reports the transaction as fraudulent, the merchant may be liable.
Like many peers in the transportation industry, RoadSync’s merchants were experiencing a lot of chargebacks. Both the financial liability and the labor of responding to chargebacks were adversely impacting their businesses.
RoadSync decided to proactively increase payment security in order to safeguard their merchants and provide more value.
Reducing chargebacks with 3D Secure (3DS)
To reduce chargebacks, Rainforest helped RoadSync implement 3D Secure (3DS).
3DS is an extra layer of authentication to verify that the payer is an authorized cardholder.
For example, the issuing bank might send a text message or push notification to the authorized cardholder’s mobile phone, alerting the cardholder to the payment attempt and requesting confirmation that the authorized cardholder is the person initiating the payment.
For payments that successfully pass the issuing bank’s 3DS authentication flow, the issuing bank takes on liability for chargebacks due to fraud.
Rainforest was one of the only providers that was able to handle the complexities of our payment flows and allow us to continue to leverage our existing system and operational investments.
– Robin Gregg, CEO of RoadSync
Fast implementation with embedded 3DS
3DS implementation can be labor intensive because it interfaces with the card networks, payment processor, software platform, merchant, and checkout. There are also nuanced differences between the setup and configuration for each card network. Each piece of the implementation must be tested to ensure that the issuing banks receive 3DS requests, and the card networks and payment processor receive responses from the issuing bank.
To reduce the technical lift for software platforms, we’ve embedded 3D Secure into our product. This enables platforms to implement 3DS, enroll merchants, and manage it with minimal code. Platforms and merchants can even choose when to use 3DS, on a per-transaction basis.
We love integrating with Rainforest — their component library made the work easier than estimated and gave us back valuable time to ship additional features for our customers!
– Whitney Weaver, Chief Technology Officer at RoadSync
RoadSync reduced chargebacks by nearly 55% when 3DS was used
RoadSync’s merchants rapidly adopted 3DS and the benefits are significant.
In transactions where 3DS was attempted, RoadSync’s merchants saw nearly a 55% reduction in overall chargebacks. Chargebacks due to fraud were reduced by 90%+ on the same transactions.
This reduces merchant losses and frees up hours that they used to spend responding to chargebacks.
Thank you for implementing 3DS! We experienced three potentially fraudulent transactions from one customer. The first resulted in a $1,794 chargeback due to fraud. The payer attempted the transaction multiple times with different cards before it was approved. However, the other two transactions were protected by 3DS and could not be charged back as fraudulent. Without 3DS, the total potential loss from these transactions could have been $5,382. 3DS saved us $3,588 that we know about. We’ll certainly be using it going forward to protect against fraud losses, and we recommend other towing companies do the same
– Chrissy Walls, Office Manager Mike’s Towing & Recovery Inc, a RoadSync customer
