How To Handle The Chargeback Frauds In The Crypto Exchange?
Introduction
Cryptocurrency exchange platforms are the easiest way to convert one virtual currency into another. The platform will collect a transaction fee for every transaction.
We know that an individual cannot purchase cryptocurrency in banks. They will be available only on exchange platforms where users exchange them for fiat. Recently, the public interest in digital currencies has increased. As a result, the crypto exchange platforms face various challenges, among which chargeback frauds are one of the primary problems.
Before getting into the safety precautions to reduce chargeback frauds, let us learn about chargebacks first.
Digital Assets Are Subjected To More Reimbursement Frauds
Comparatively, digital goods face more chargeback frauds than traditional ones. Particularly, if you are an exchange service provider, you have to be more cautious about these frauds.
An exchange service should enable secure and smooth transaction facilities for the customers. A fraudster can use your stolen credit card number to buy cryptocurrency, leading to increased chargeback volume.
On the other hand, the user also attempts to get a refund. It happens when the crypto he bought has lesser value than the fiat (Ex: Dollar).
How to protect your exchange platform from chargeback frauds?
Reducing the chargeback scams in a crypto exchange platform is not easy as it sounds. A high volume of chargeback stunts will collapse the financial state on your balance sheet. It requires a good payment processing system to mitigate scams.
We have given below a few ways to keep chargeback frauds at bay.
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Proof Of Identity
Do not allow an unauthorized person into your exchange platform. If not, you will end up with fraud chargeback claims.
At first, the onboarding process needs to be easy but with layers of security. When there is a withdrawal or transfer of crypto, the user will be required to undergo ID verification and authentication. But make sure the platform is user-friendly for the customers. Or this will become an advantage to your competitors.
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Alternate Payment Processing Methods
In most cases, exchange platforms join hands with banks to enable easy payment processing. It is because bank transfers are much cheaper than card transfers. However, the bank transfer might take a few days if there is a delay in reconciliation.
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Introduce Automated Chargebacks
The current situation of the crypto industry showcases its future growth. So, exchange platforms will be the primary venue for bulk crypto transfers. In order to get rid of frauds, leverage the technologies such as AI, human insights, and big data.
This will introduce automation into the exchange and improve its resistance against chargeback frauds.
Conclusion
Crypto exchange platforms will create a positive impact on various businesses in the future. In such a powerful area, it is necessary to mitigate scams. It is possible by creating a 24/7 supervised crypto exchange. Incorporate the best cryptocurrency exchange development services into your enterprise to make it future-ready.
