Managing Fraud and Chargebacks on Google Pay
There’s never been a better year than 2020 to embrace seamless, touchless payment systems. For most merchants, that means accepting Google Pay and Apple Pay, the device-specific digital wallet platforms included with today’s smartphones. Google Pay merged with Android Pay two years ago, making it the touchless payment platform of choice for most Android users today.
Google Pay transactions are funded by actual credit cards, making them subject to the chargeback process, and of course there’s no payment platform that fraudsters won’t try to target. What do merchants need to know about fraud, disputes, and chargebacks on Google Pay?
Google Pay still lags behind Apple Pay in terms of market share, but there are still more than 100 million users making payments with it, and of course Apple Pay is of no use to anyone who doesn’t own an iPhone. As the global COVID-19 pandemic has driven up interest in touch-free payment methods, digital wallets and mobile payment apps have swiftly gone from novelty to necessity in the minds of many consumers.
Merchants can attract and retain more customers by accepting these payment options, but you’ll want to go into it with an understanding of not just the basic mechanics of how these transactions work, but how effectively they are secured against cyberattacks and what the dispute process looks like when Google is involved as a third party.
How Does Google Pay Work?
Google Pay is a mobile app that lets users send and receive money via stored credit or debit card credentials. It can be used online or in person, and when used in-person it utilizes near-field communications technology to make contactless payments. The customer simply holds their phone near the merchant’s NFC-enabled terminal and Google Pay will complete the transaction wirelessly. The customer authorizes the payment with their own phone, so they never need to touch the merchant’s terminal or sign anything.
Users can add different credit or debit cards to their Google Pay accounts, and can use any uploaded card to fund their transactions. When a Google Pay transaction is initiated, the app generates a virtual account number that is transmitted to the merchant’s terminal for processing.
In an ecommerce setting, merchants can offer Google Pay as a checkout option, similar to PayPal. The customer will provide Google Pay with their login credentials to authorize the transaction, and checkout can proceed as usual from there.
Is Google Pay Secure?
One good thing about Google Pay is that it uses effective, up-to-date security protocols to keep customer data safe from fraudsters, hackers, and unethical merchants. There are three key elements to Google Pay’s security features. First, it stores the user’s payment credentials in an encrypted format on Google’s servers. While no company can ever guarantee total safety from a data breach, you can reasonably expect that Google will spare no effort to protect the integrity of Google Pay.
Google Pay also requires users to log into their smartphone and then separately log in to the Google Pay app in order to authorize a transaction.
This makes it extremely difficult, if not impossible, to make unauthorized Google Pay transactions by accident, or with a stolen phone.
NFC-enabled terminals cannot be rigged to initiate transactions without the user’s knowledge.
Lastly, the use of virtual account numbers protects the customer’s payment credentials at the point of sale. The merchant receives only a newly-created, single-use virtual account number, not the actual payment card account number. If the merchant’s computer is hacked, the data cannot be used to make unauthorized transactions or create cloned credit cards. This is similar to the way EMV chips work, and that technology has been extremely successful at reducing fraud in card-present environments.
When you do see fraud over Google Pay, it will often be because a fraudster succeeded in using a low-tech method such as phishing or social engineering to convince a user to divulge their Google Pay login credentials.
How Do Chargebacks Work Over Google Pay?
When a cardholder contacts their bank to dispute a charge that was used to fund a Google Pay transaction, the process unfolds much as an ordinary card dispute would.
However, in this scenario, Google Pay occupies a role similar to that of the merchant’s acquiring bank.
Once the cardholder contacts their issuer with their dispute claim, the issuer contacts the card network, and the card network then contacts Google Pay. Google will email merchants with the details of their chargeback and request any supporting documentation that can be used to fight the dispute. The merchant will be given a deadline for their response.
After the merchant responds, Google will review the documentation. If Google believes the merchant’s claim has merit, they will submit a representment of the charge, along with the merchant’s evidence, to the issuer. The issuer will then render a decision on whether to uphold or reverse the chargeback.
Google Pay will credit back transaction fees for transactions that get charged back, but chargeback fees will apply if the chargeback is upheld.
The chargeback process with Google Pay is not materially different than the chargeback process merchants are already familiar with. Merchants can avoid chargebacks over Google Pay by following the same best practices they should already be using—for example, obtaining tracking numbers and delivery confirmation for all orders, documenting all communication with customers, and clearly presenting their terms and conditions of purchase to the customer before finalizing a sale.
Merchants should always respond as quickly as possible to Google Pay chargeback notifications to give Google as much time as possible to review and prepare representment. Staying on top of notifications can be one of the more challenging aspects of chargeback management for busy merchants, but it is essential to defeating friendly fraud and other invalid chargebacks.
Remember that when chargeback management feels overwhelming, there are always professionals like the experts at Chargeback Gurus ready to step in and help you craft a plan of action that can put you back in control of your disputes and chargebacks.