MA Thesis

Fraud Chargeback Detection for Startups Based on User Online Payments Performance



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Kyiv School of Economics
fraud chargeback detection
user online payments performance

Many startups According to the “Startup Ecosystem Rankings” report, made by StartupBlink company, Ukraine was in 29th position in the top ecosystems for startups worldwide. In this study, Kyiv is at 32nd place on the Global Rank of cities, which makes it a European startup hub. Also, Ukraine is at 40th place on the number of startups in the country's top tier made by “Startup Ranking”. Thus, the startup industry in Ukraine is successful and has had rapid growth in recent years. That makes research about Ukrainian startups interesting, useful and an actual topic to study. Many startups develop applications, websites and are selling their products online. For businesses to be able to accept card payment or another type of online payments they need to plug into payments providers or develop their own infrastructure. Wrong decisions in this field can cause revenue loss of up to 30%. Another problem that startups face after they are able to accept online payments is fraud. Fraud is, unfortunately, a common social phenomenon that highly affects the online payments industry. Cardholders whose card information was stolen and payment was performed usually issue a chargeback in order to get their money back. On average businesses are losing 5% of their revenues due to fraud. Cybercrimes are hard to detect and punish because of their international origin and easiness to confuse the crime traces. In addition to a revenue loss from fraud, businesses with high chargeback rates are included in the card networks (like VISA or MasterCard) monitoring program. If a company has been in the monitoring program for more than 3 months, it can be blocked from accepting online payments in the