The importance of risk reduction on merchant uptake of real-time credit card payment processing systems

Abstract

[Abstract]: Credit cards are the primary means of payment of goods and services over the Internet. Many characteristics of credit cards leave merchants vulnerable to fraud, inconvenience and loss of potential customers. Despite the fact that the security issues of confidentiality and integrity are largely addressed in real-time credit card payment processing systems (RTCCPS), the one missing link from a merchant’s perspective has been customer authentication. The lack of effective payer authentication mechanisms has seen a high level of reported fraud resulting in revenue loss and costs to the merchant that are associated with chargebacks, merchant liability, fraud screening and dispute resolution. This research-in-progress paper proposes a model that has the potential to predict the likelihood of the adoption of a RTCCPS when these risks are mitigated by a reduction of fraud levels and monetary losses through customer authentication and merchant liability shift.