Global payments technology company Mastercard has announced its First-Party Trust programme to protect small businesses and merchants. Specifically, the First-Party Trust programme is a collaborative effort with industry groups such as the US Merchant Advisory Group and Merchant Risk Council, aimed at addressing the increasing issue of first-party or 'friendly' fraud.

This form of fraud occurs when legitimate transactions are mistakenly or intentionally disputed by cardholders. Datos, a data analytics company, reported that 75% of fraud experienced by digital businesses falls into this category. As global ecommerce continues to grow, ensuring the safety and transparency of payments for merchants, small businesses, and entrepreneurs becomes essential.

The First-Party Trust programme primarily benefits small businesses by alleviating the previously time-consuming and resource-intensive task of researching and addressing claims. It also assists issuers in accurately distinguishing between third-party fraudulent transactions and first-party fraud, thereby providing more reliable information during disputes with cardholders. The programme's core objective is to enhance transaction transparency by allowing merchants, including small businesses, to share pertinent insights to combat first-party fraud.

Mastercard offers two avenues for sharing enhanced data: merchants can include this data as part of the transaction or submit it post-transaction as part of the dispute resolution process. How does First-Party Trust improve dispute resolution? First-Party Trust supports dispute resolution by offering AI and risk modelling to identify genuinely fraudulent (third-party) transactions and flag high-trust level transactions, as well as enhanced data signals for issuers, providing deeper insights into the cardholder's purchase history, device, delivery information, identity details, and geographic location. Moreover, the programme provides new rules defining compelling evidence to recognise legitimate purchases and prevent unnecessary disputes, which includes merchant chargeback protection for disputes complying with First-Party Trust data sharing requirements.

Representatives from Mastercard highlighted the importance of reducing transaction friction and enhancing the experience for all parties involved in the digital spending landscape. They emphasised that their technology enables banks and merchants to maintain trust with their customers and stressed the need to empower the entire ecosystem with tools and technology to combat fraud while upholding consumer protection standards. Officials from the Merchant Advisory Group talked up Mastercard's programme for transforming the dispute experience, emphasising the significance of trust in the relationships between various stakeholders.

Officials from the Merchant Risk Council expressed support for the programme and its potential to benefit a wide range of merchants. They look forward to continuing the partnership to streamline transactions and enhance the dispute resolution process. The First-Party Trust programme is a global initiative, with its rollout commencing in the United States in 2024.

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