This is the second in a 3-part series on systematizing merchant risk and compliance programs to better prepare for card-network scrutiny. In the first part, we explored the importance of accurate Merchant Category Codes (MCCs) on risk management. Today, we shift gears to another critical aspect of future-proofing your business: reputation management.
To fully understand merchant portfolio risk, payments providers need to look beyond careful onboarding and monitoring for card network compliance. The broader picture includes managing financial risks associated with high chargeback rates and merchants going out of business.
This is where reputation monitoring enters the equation. Complaints and negative news about your merchants can be early warning signs of additional risk, even if they don’t directly violate card network rules. Proactive and ongoing monitoring of online reputation provides valuable insights that traditional due diligence might miss. By identifying potential problems early on and taking appropriate action, you can mitigate risk and protect your business from financial losses and reputational damage.
The reputation ripple effect
A merchant’s online reputation can affect your payments business. Regularly checking reviews and news helps you stay informed about changes in a merchant’s business practices or customer sentiment, enabling you to:
- Reduce chargeback risk: A flurry of negative reviews or complaints can foreshadow potential chargeback issues. Identifying patterns in negative consumer reviews, social media chatter, and news arms you with information for making risk decisions related to these merchants.
- Safeguard brand reputation: By association, negative press about your merchants can reflect poorly on your brand. Reputation monitoring allows you to identify and address potential issues before they escalate into PR problems.
Be proactive
Just as you conduct due diligence before onboarding new merchants, you must conduct ongoing due diligence to properly manage risk in your established merchant portfolio. Monitoring for content violations and transaction laundering are critical for staying in card brand compliance, but when it comes to avoiding chargebacks, proactive reputation monitoring is a critical component that some risk managers neglect.
We recommend these best practices:
- Partner with merchants on reputation management: Encourage your merchants to actively manage their online presence by soliciting positive reviews and responding promptly to feedback.
- Develop protocols: Establish clear communication protocols for merchants experiencing negative online reviews. This ensures a unified approach to addressing customer concerns and minimizing chargebacks.
- Invest in reputation monitoring: Whether you hire an in-house team or partner with reputation monitoring experts like G2 Risk Solutions, be sure to invest in a comprehensive reputation monitoring program.
By implementing these strategies, you can leverage reputation monitoring to not only safeguard your business from potential risks but also build stronger relationships with your merchants. This proactive approach fosters trust and positions you as a valuable partner in their success.
Stay tuned for the third installment of this blog series, Future-proofing your payments business with effective change detection, which will discuss mitigating risk by detecting changes to merchant business policies.
Next steps
- Read part three of the series, Future-proofing your payments business with effective change detection.
- Watch our webinar, Future-proofing Merchant Compliance, for a conversation with two industry veterans who talk about how they plan for and respond to card network requests.
- Need help? Contact us. We’re here to help.