I work at this company since 2+ years, day before yesterday company received an email from one of the two payment gateways that they use for catering Indian and International users for both payments as well as payouts. Now since the gateway that was catering the international users banned the company's account, all of the international transactions went to 0 quickly which was more than 90% of the total revenue, additionally they fined the company for $425,000
Now the problem for the company is:
Now, the thing is company knew this day was possible but they had took preventive measures as well and weren't expecting this to happen anytime soon and atleast with a prior notice unlike which landed like a bomb with a brief (text only) email.
So there are features called radar and chargeback protection in the payment gateway which take some percentage of your transaction to ensure if there are some fraudulent/illegal transactions they will flag those transactions and prevent the customers (our company in this case) from getting disputes from the card owner/payee, having which of no use to the company. As per the terms, a threshold percentage of your transactions need to be disputed in order to be flagged as suspicious for the payment gateway which was way less in the company's case.
Although company too could have prevented this from just banning users whose payments were getting disputed by the card holders claiming they didn't authorise the purchase or either the user didn't deliver for what the payment was done by the payee. In either of the case banning that user was the ideal action.
Were you guys using forter? Or what was the fraud prevention thur party company used in this case?
We used ByeDispute for fraud detection, anyone has used that?
Nope never heard of it. What's the licence cost? Can ask your company to try out forter if it's comparable prices. Else if you guys are in a real pickle, I work a lot with payment gateway companies as well as charge back fraud. I can try and give a consultation if they'd be interested. I've resolved a similar issue for a Dubai based SaaS company before.
In conclusion, going with the ethical way could have been better, also having an alternative gateway ready with KYC is always a good thing.
Think one can figure out the gateway since Radar is mentioned.
What’s the actual chargeback percentage? Above 1 percent starts running risks of accounts getting put on hold. But a fine is very unusual unless the chargeback is huge ie >5 percent; they would probably be holding the funds for a while as insurance against future chargebacks. The business can always contest these claims with proof if a genuine service is provided. RBI ombudsman is an option the business can take as well if they think there’s a fair case.
One safer alternative while accepting international card payments is to ask the gateway to disable transactions for non 3D Secure cards. This will lead to higher declines but reduces chances of someone's stolen card being used on your platform and thus reduced chargebacks.
That said, the payment gateway and the fraud detection tool should be able to detect such potentially fraud transactions and not process them automatically. Instead flag them and let the business choose to accept the txns at their own risk.
Surely you can figure out the gateway, but the chargeback protection percentage is standard i.e. 0.4%. And the percentage ratio of disputes to the transactions was also way less than 1 percent which is what makes it even more confusing as why out of nowhere the account got blocked.
Yup, acceepting non-3DS cards should be totally businesses ownership, but then having to give 0.4 per disputed transaction + transactions fees too irrespective of the dispute result is something that I found that this gateway might be taking advantage of.
Nonetheless, there's no way forward from here unless you have good contacts
The transaction fee is levied for a bad transaction also. Its the banks cheating here.
I didn't understand why the payment gateway banned the company
What do u mean by ethical way?
Why did u think banning it is ideal
The reason is still under investigation but the chances are that the card brand whose most transactions were marked as fraudulent/unauthorised by the owners on the gatway, issued this request to the gateway as a result they banned the company's account.
I assume that if you being a company know that a user is doing fraudulent transactions then you would not want to include it in your revenues since those transactions are not genuine hence the money holder could eventually claim them hence making that transaction of not to negative use to the company.
Banning is ideal because when there's a virus you try to stop it right there itself to prevent the spread. Additionally you should also build framework to prevent such users from using the same tricks with different accounts.
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PAYTM Payments Bank essentially asked to shut shop.
Afaik here are the few implications
That stock is about to crash so fucking hard. Thank god i got out. The crappiest IPO of this decade.
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