February 7, 2023

Mastercard: Fight ‘Gobbledygook’ On Statements

It’s happened to almost all consumers: They’re idly perusing their credit card statements when they come across completely confusing, seemingly random charges from businesses they don’t recognize in locations they’ve never visited. Consumers panic and call their issuers to question these charges.

Sometimes they’re just looking for more information, but other times they skip right to demanding chargebacks because they’re quite sure these purchases aren’t theirs and that they’ve been victims of fraud. But Johan Gerber, Mastercard’s executive vice president of security and cyber innovation, told Karen Webster in a recent conversation that too often consumers are dealing with merchants they did shop with, but whose names showed up funny on credit card statements and weren’t immediately recognizable.


“All of this confusion leads to a really big chunk of chargebacks,” Gerber said. “By 2021, we’re looking already at a cost of $8.6 billion related to chargebacks and disputes for the U.S. alone. And of course, if there’s that amount of cost, it has to be absorbed somewhere in this ecosystem — which means it impacts all of us down the line.”

And as digitization continues to pick up the pace, the problem could quickly get a lot worse before it gets better, as increasing numbers of consumers try to decipher card statements and confusing references to digital purchases.

But Mastercard, and Ethoca, the company’s fraud collaborative fraud and dispute resolution technology, is looking to head that off via a new initiative that aims to inject some clarity into consumer card statements. The system can place a merchant’s logo next to transactions in digital banking applications, making it obvious to a consumer what a transaction is and that it’s legitimate.

“This makes it possible for consumers to see at a glance everything they need to know about the transaction — this is Merchant X, they can see the logo and see the descriptor,” Gerber said. “Ultimately, we hope [this] will actually reduce the confusion and therefore reduce the churn and chargebacks.”

A Simple Solution To An Expensive Problem 

Friendly fraud doesn’t get the attention that professional fraudsters get, but Gerber noted that it takes a hefty bite out of merchants’ bottom lines. Depending on the industry, friendly fraud can account for anywhere from 25-80 percent of all fraud losses.

Some of that is genuine fraud, where a customer knowingly bought something but claims they either never got or never ordered it,. But Gerber said a lot of friendly fraud isn’t deliberate. It’s complaints called in by people acting in good faith who don’t recognize a charge because the information on their statements is confusing. It’s estimated that 25 percent of all friendly fraud is the result of transaction confusion.

The obvious solution from where Mastercard stands is to remove opacity from the process that’s confusing customers and costing merchants money.

“The first thing we can do is ‘enrich’ transaction [information],” Gerber said. “We want to actually work with our merchants to say, ‘Give us your logos and we will match that transaction to your business. And we will actually enable the issuing banks, so the bank that gave you a credit card can actually put an enriched descriptor [with] the merchant name.’”

Beyond that, Mastercard plans to attach an image of the receipt to online statements so customers can click and get a complete view of the transaction to eliminate any remaining uncertainty. That’s simple on the front end — and enabled on the back end by artificial intelligence and various other technical methods. Those provide a merchant descriptor with useful information instead of what Gerber called “the gobbledygook” that currently causes so much confusion.

Building A Better End-To-End Customer Journey

With today’s eCommerce explosion and the resulting explosion of digital payment methods, such transaction confusion will only get larger, causing more painful friction for consumers, resulting in more churn and lost funds for merchants. Gerber said that’s why Mastercard felt the problem needed an immediate solution.

But he added that the picture is bigger than merely heading off the harmful effects of chargebacks and churn. It’s more about the salutary effects on consumer trust that increased transparency can provide.

Gerber said that in his case, an unclear charge is unsettling even when he can figure out what a mystery transaction on his card statement really is. He said consumers often wonder why a merchant will “hide” its identity on a statement, but the retailer isn’t deliberately doing so and probably doesn’t even know how its name appears.

“This solution goes well beyond solving a pain point of the money being spent to resolve chargebacks,” Gerber said. “I think we’re empowering our consumers to know what’s going on and allowing ourselves to spend the ‘mind share’ on more strategic things.”

He said the solution will help consumers focus instead on such things as “analyzing how [a purchase] impacts their spend, understanding where their credentials are being held and knowing there’s one place where they can always get the details of what they spend and how they spend without having to go and search for receipts in their email.”



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