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Payments fraud doesn't begin and end with stolen credit cards. There are sophisticated international networks of criminals who dedicate their entire lives to scheming and scamming merchants and consumers for every cent that they can extract. But there are also experts in the payments fraud field who are actively fighting back. True Fraud features real-life stories of the battles that are raging across the world, one transaction at a time.
Welcome to True Fraud. I'm your host, Pablo Torres. And today, we're gonna talk about the tariffs, everything that's going on with tariffs, and how they could impact the level of chargebacks and your chargeback ratio with your ecommerce business. Regardless of the decision from one country or another to stop shipping and and, you know, like, the the to and from the states, you know, talking specifically about the the the reaction from China, there's gonna be a direct impact regardless if China decides to do that. And there's gonna be a direct impact simply because of the all the turmoil that this is causing.
Pablo Torres:Right? It's creating a lot of confusion, and it's kind of moving things around. And now that there's tariffs kind of you know, it was sort of announced, like, tariffs for everyone, and that will definitely have a a direct impact on your business. We're gonna talk a little bit about how the everything that's happening out there right now, unfortunately, we can't say or we can't talk about this is exactly what's gonna happen since, you know, there's tariffs today and then there's none tomorrow. Everything is just kind of up in the air, and so we can't give a very concise idea of how things are gonna be impacted.
Pablo Torres:However, we have the concept or we have the the knowledge to be able to understand the kind of the snowball effect to anyone any kind of these, decisions and how they impact the market. Right? Right now, China's, reaction to stop shipping from and to The States, of course, there's gonna be a direct impact to, a lot of ecommerce, specifically talking about, like, drop shippers, for example. And then there's, of course, a lot of other, businesses who decide to keep their warehouses in China. And then, of course, things are being manufactured there.
Pablo Torres:And then the the business, which, you know, might be located somewhere in Malta or something like that, then all of those products that are being shipped from China into The States, then all of these businesses now are gonna have to figure out a different route, I guess I guess, for these products. Right? This includes maybe adding a a new 3PL, third third party logistics provider, or maybe setting up kind of like a new warehouse where they can hold some of these goods and then then move them from there. Regardless of of how they strategize to move their product and to be be able to catch up with everything that's going on. It is important to note that now given the the situation and how there's tariffs that are constantly changing, then, even if the product is not coming directly from China, there might be some other tariffs that are, applied to the product.
Pablo Torres:And so this is something that's, you know, a little bit hard to navigate right now, and that will definitely impact your business. The other part of of how, you could potentially leverage this, this is a great opportunity to kind of invest in some of the markets that you were never maybe too inclined to explore. Right? So if The U. S.
Pablo Torres:Market suddenly is going to be kind of bogged by all of this stuff and and the products are gonna, start getting delayed and and the deliveries and they're gonna be held at customs or something like that, then maybe they this is a great opportunity to go and try and sell your products in Spain or in Australia or, you know, maybe other markets that you have heard that are great opportunities and you never did because, you know, you didn't have to. You didn't have to risk anything. And so now this is you know, instead of seeing it as a as a problem, maybe this is something that comes up as an opportunity for you and your business to to grow. When you have an ever changing environment and you don't know when orders are gonna be delayed, then the communication that you have with your customers, with your buyers, should be clear enough so that they I don't know. Maybe you ask them to practice a little bit of patience.
Pablo Torres:You know? I think everyone is very aware of everything that's happening in the planet, and it's not just The US economy. I think everyone every other economy is kind of trying to understand how do we navigate this. And so if things are gonna start getting delayed and then you're not communicating to your customers, then that also means it translates into a wave of chargebacks for good service and not received. If you're having manufacturers that are not willing to work with you because you're in The States, or, you know, for whatever reason, maybe the the things that your supplies that you use to put your product together is coming from China, then everything will get delayed.
Pablo Torres:So it's not just the delivery of the goods. It's also the production of the goods. Right? So you need to to learn to strategize this and navigate this by maybe talking with different suppliers, talking with different, logistics channels, talking with your, again, with your buyers and communicate and be clear on the message with we're learning how to navigate this. Recently, I saw on, a few websites where, you know, maybe we're talking about, two weeks ago or something like that, where if you went to if your card was of a certain amount or higher than than a certain amount, they they had set a threshold, they basically were saying, we can't process this because we don't know how to handle it.
Pablo Torres:And so that's a very interesting approach. You know, I think missing on sales is never the best strategy, but also they were not only protecting their customers, they're protecting themselves as a business because that represents a risk that maybe at the time they're not willing to take, you know, especially when it's something that's changing so much and and, it's it's something that it just remains unclear as to when is this really gonna come into effect or when is this gonna change. And it could be just in the next two hours or the next week or, you know, who knows? It could be in the next month. I think at some point, all of this is gonna settle, and then, business, of course, are gonna be able to learn how to handle this.
Pablo Torres:Right? Leo, who you probably have listened to in some of the other podcast, he was referring to trying to to educate the the buyers with, this is how we're gonna do things, and this is how we're gonna charge for this. And, you know, if the product is, DDU, then that means, you know, then the you're including that into the price or not. You're so being able to to understand that whole landscape and then translating it into your checkout flow, I think that's gonna be of great benefit for your business. So like on service provider or on the PSP side of things, you know, thinking about the card networks and the card processing, then of course, you know, if we're introducing the concept of the new chargeback ratio calculation under the new Visa Acquirer Monitoring Program, we need to keep in mind that that's also been a little bit of a changing environment, and there's been a lot of fluctuation in how that ratio is going be calculated.
Pablo Torres:There's rumors. Everyone is talking about somebody that heard something from Visa or, you know, friends of friends or something like that. And you hear a lot of things in the industry where, Visa is supposed to have kind of, like, the final say of how things are gonna be handled in the new VAMP approach. Right now, things have changed multiple times, several times in the way that initially, RDR was not introduced in the in the chargeback ratio calculation, and then suddenly, it was going to. RDR, including CDRN and and so on.
Pablo Torres:And then suddenly, we saw that so they were removed, and now the new what I've heard is that now RDR, CDRN, and Ethoca are gonna be dismissed when the the chargeback ratio is calculated. This is not official, of course, and, you know, this this is why maybe the the time of of the release of this might be important. But yeah. So the the the new Visa acquired monitoring program may or may not include those those numbers into into the the chargeback ratio calculation. And so there's no there hasn't been any any word from Visa in regards to we understand what everything that's happening right now in the political landscape, what that might cause as an impact in regards to chargebacks, but, I'm sure that they're aware of it.
Pablo Torres:However, having said that, their the grace period from when VAMP went basically live on the April 1 until the October gives every merchant ample time to know how to react to this. So in the meantime, while everyone kind of adapts and learns on the new changes that are coming up and as Visa also updates everyone on how that ratio is gonna be calculated, then we have until October for that. And so if this whole tariff thing kind of blows all the way into October, I I'd be surprised. And although, you know, it may not be that crazy to think about it, but I think that at that point, we should have enough information to know how to handle that. I think the best way to approach this, of course, is, you know, step number one is to communicate with with your clientele, with your buyers, communicate with your service providers.
Pablo Torres:They will definitely have a better idea of how to address the situation. And and then, of course, you know, I think keep it cool. Keep it remain calm. Things are changing, and the best thing that you can do is just educate yourself. Learn about what your options are.
Pablo Torres:Learn about what's the best way that you can strategize to to move your business forward. You know, stay in tune with the news and talk with your service providers. They're normally the ones that will have the news, like, firsthand. And, yeah, communicate with your with your buyers. I think that's that's always key.
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