Everything Merchants Need to Know About Mastercard’s First Party Trust Program
Mastercard’s latest salvo in the battle against first-party fraud is the First Party Trust program, a savvy tool aimed at what’s often called “friendly fraud” or first party misuse. This type of fraud, where customers claim legitimate charges are fraudulent, is not just a thorn in the side of merchants — it’s a hefty burden that clogs up the whole payment process.
Understanding the First Party Trust Program
At its heart, the First Party Trust program is Mastercard’s way of tackling the tricky issue of first-party fraud head-on by leveraging enhanced transaction insights, artificial intelligence, and risk modeling. In fact, a whopping 75 percent of fraud in digital businesses falls into this category, so it’s clear that this program couldn’t come soon enough.
How Does the Program Work?
The idea is simple yet effective. Mastercard offers two options for sharing insights between a merchant and card issuer. Merchants have the choice to transmit the enhanced data either during the transaction itself or afterward, as part of the dispute resolution process. Data from two prior, nonfraudulent transactions are used as a baseline and compared with prior transactions using AI to determine the merits of the dispute. This data can range from IP addresses, device IDs and shipping addresses to login details — anything that proves the transaction is legit.
What’s in it for Merchants and Issuers?
For merchants, this program is a game-changer. It allows them to present solid evidence upfront, potentially sidestepping costly chargebacks initiated from these so-called friendly frauds. This not only saves money but also keeps their chargeback ratios healthy, which is a big deal in maintaining good standing in compliance programs. For issuers, it means getting their hands on more reliable data which sharpens their ability to sniff out the real fraud from the friendly ones.
The Perks of Data Sharing and Liability Shifting
One of the key features of the First Party Trust program is its ability to shift the liability of disputed transactions. If merchants can provide data that matches that of two undisputed past transactions, they can push the liability onto the issuers. This means they dodge the headache and the financial hit of the chargeback process — a win-win if there ever was one.
The Tech Edge
It’s not just about submitting data. The program is backed by AI and risk modeling technologies to better identify which transactions might be fraudulent and which are just misunderstood.
Additionally, merchants have options on when to provide this crucial transaction data. They can do it during the transaction moment or after a customer raises a question but before it escalates into a full-blown dispute. Sharing data at both stages could dramatically reduce the number of disputes that escalate into major issues.
Looking Ahead
The First Party Trust program is primed to be a game-changer for merchants and issuers. It's expected to mimic some of the best parts of similar programs, offering merchants a sturdy shield against chargeback disputes.
Ultimately, with the First Party Trust program, Mastercard is setting out to streamline the digital commerce experience, reducing the friction and expense tied to first-party fraud. This isn’t just good news for merchants and issuers; it’s a boost for the entire payment ecosystem, ensuring transactions are smoother and everyone involved can breathe a little easier.
Navin Sequeira is the vice president of global operations for Chargeback Gurus, and is responsible for the strategic direction, vision, growth and performance of Chargeback Guru’s global operations.
Navin Sequeira is the vice president of global operations for Chargeback Gurus, and is responsible for the strategic direction, vision, growth, and performance of Chargeback Guru’s global operations. He is a strategic and results driven leader with experience in leading and transforming global service delivery operations. Navin is a Certified Payments Professional and a Certified Chargeback Expert and has deep understanding and experience in the payments and card industry.
As a seasoned professional with over two decades of experience in managing large-scale diverse operations in areas such as XBRL, Banking and Financial Services, Legal Services, Remittance Processing, Credit Card services and Process Virtualization among others, Navin is known for driving brand growth, maximizing operational excellence, delivering financial performance, and designing and implementing systems, policies, and procedures.
Navin held several global leadership positions with companies such as RR Donnelley, GE, and Mahindra Satyam, leading large geographically dispersed teams in cross-functional and multi-vertical sites with a focus on maximizing company's revenue/profitability, growing client base, and developing new business.
His personal philosophy ensures frictionless communication, understanding of clients’ pain points and device customized solutions that bring quick and sustained results. His passion is for delivering service that goes beyond organizational expectations, creating a win-win scenario for everyone involved.
Navin holds an MBA and executive management programs from leading B-Schools such as Indian Institute of Management - Kozhikode (IIM-K), Loyola Institute of Business Administration (LIBA) and Bharathidasan Institute of Management (BIM). He is also Six-Sigma certified, holds a diploma in Information Technology, and has won several leadership awards and certifications.
