Table of Contents
ABSTRACT.. 2
CHAPTER ONE.. 5
INTRODUCTION.. 5
1.1 Background to the Study. 5
1.2 Statement of the Problem... 7
1.3 Objectives of the Study. 8
1.4 Research Questions. 8
1.5 Research Hypothesis. 8
1.6 Significance of the Study. 9
1.7 Scope of the Study. 9
1.8 Limitations of the Study. 10
1.9 Organization of the Study. 10
CHAPTER TWO.. 13
REVIEW OF RELATED LITERATURE.. 13
2.1 Introduction.. 13
2.2 Theoretical Review.. 13
2.3 Conceptual Review.. 15
2.3.1 Overview of Key Concepts. 15
2.4 Empirical Review.. 18
2.5 Summary of Literature Review.. 20
CHAPTER THREE.. 21
Research Methodology. 21
3.1 RESEARCH DESIGN.. 22
3.2 DATA COLLECTION METHODS.. 22
3.3 SAMPLING STRATEGY.. 23
3.4 DATA ANALYSIS.. 23
3.5 ETHICAL CONSIDERATIONS.. 24
CHAPTER FOUR.. 24
DATA ANALYSIS AND INTERPRETATION.. 24
4.1 Preamble. 24
4.2 Socio-Demographic Characteristics of Respondents. 25
TABLES BASED ON RESEARCH QUESTIONS.. 30
4.3 Analysis of the Respondents’ Views on Research Question one:. 30
4.4 Testing Hypothesis. 44
4.5 The discussion of findings. 45
CHAPTER FIVE.. 48
SUMMARY CONCLUSION AND RECOMMENDATION.. 48
5.1 Summary of Findings. 48
5.2 CONCLUSION.. 49
5.3 RECOMMENDATIONS.. 51
REFERENCES.. 52
APPENDIX.. 55
Detailed questionnaire tailored to the research topic on the impact of chargeback fraud on e-commerce activities, specifically focusing on a case study of InterSwitch Nigeria. 55
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In recent years, the proliferation of e-commerce platforms has transformed the landscape of retail, offering convenience and accessibility to consumers worldwide. However, alongside the benefits of this digital revolution comes the looming threat of chargeback fraud, which has emerged as a significant concern for e-commerce activities. Chargeback fraud occurs when a consumer disputes a legitimate transaction with their bank or credit card issuer, resulting in a chargeback to the merchant. This fraudulent activity not only poses financial losses but also undermines trust and confidence in online transactions, impacting the overall sustainability of e-commerce ecosystems. Smith, J. (2020).
The impact of chargeback fraud on e-commerce activities is multifaceted and far-reaching. Financially, it imposes substantial costs on merchants, including lost revenue, chargeback fees, and operational expenses associated with dispute resolution and fraud prevention measures. Moreover, the cumulative effect of chargeback fraud can erode profit margins and impede the growth prospects of businesses, particularly small and medium-sized enterprises (SMEs) that may lack the resources to combat fraudulent activities effectively. Beyond monetary losses, chargeback fraud engenders a climate of uncertainty and mistrust within the e-commerce community, deterring consumers from making online purchases and tarnishing the reputation of legitimate merchants. Jones, A., & Williams, B. (2021).
To comprehend the nuanced ramifications of chargeback fraud on e-commerce activities, it is essential to examine its underlying causes and contributing factors. Factors such as identity theft, friendly fraud (where legitimate consumers falsely claim unauthorized transactions), and organized crime syndicates exploit vulnerabilities in payment systems and loopholes in dispute resolution processes, exacerbating the prevalence of fraudulent chargebacks. Furthermore, the rapid pace of technological advancements and evolving consumer behavior have introduced new complexities, making it increasingly challenging for merchants to detect and prevent fraudulent transactions effectively. Patel, R., & Gupta, S. (2019).
Addressing the menace of chargeback fraud demands a concerted effort from stakeholders across the e-commerce ecosystem, including merchants, payment processors, banks, and regulatory authorities. Implementing robust fraud detection and prevention mechanisms, leveraging advanced analytics and machine learning algorithms, can enhance merchants' ability to identify suspicious transactions in real-time and mitigate potential losses. Moreover, fostering greater transparency and collaboration among industry players, coupled with stringent enforcement of regulations and standards, is crucial to deter fraudulent activities and safeguard the integrity of e-commerce transactions. By adopting a proactive and collaborative approach, stakeholders can mitigate the adverse effects of chargeback fraud and foster a more secure and resilient e-commerce environment for businesses and consumers alike. Lee, C., & Kim, D. (2018).
1.2 Statement of the Problem
The surge in e-commerce transactions has brought about unprecedented convenience for consumers and expanded market opportunities for businesses. However, amidst this digital revolution looms the pervasive threat of chargeback fraud, which poses a significant challenge to the sustainability and integrity of e-commerce activities. Chargeback fraud occurs when a consumer disputes a legitimate transaction with their financial institution, resulting in a chargeback to the merchant. This phenomenon not only leads to direct financial losses for merchants but also undermines trust and confidence in online transactions, hindering the growth and profitability of e-commerce enterprises. Smith, J. (2020).
To comprehend the gravity of the problem, it is imperative to delve into the underlying causes and implications of chargeback fraud in the realm of e-commerce. Factors such as identity theft, friendly fraud, and inadequate fraud prevention measures contribute to the proliferation of fraudulent chargebacks, imposing substantial costs on merchants and eroding consumer trust. Furthermore, the dynamic nature of online transactions and evolving fraud tactics necessitate continuous adaptation and innovation in fraud detection and mitigation strategies. Without effective measures in place, the impact of chargeback fraud on e-commerce activities will continue to escalate, posing a formidable challenge to the sustainability and security of digital commerce. Patel, R., & Gupta, S. (2019).
1.3 Objectives of the Study
The main objective of the study is to examine Impact of charge back fraud on E-commerce activities. Specific objectives of the study are:
- 1. To quantify the Financial Impact of Chargeback Fraud
- 2. To understand Consumer Motivations Behind Friendly Fraud
- To analyze the Effectiveness of Fraud Prevention Strategies
1.4 Research Questions
To guide the study and achieve the objectives of the study, the following research questions were formulated:
- What is the average cost per fraudulent chargeback for e-commerce businesses of different sizes?
- What are the most common reasons why consumers file fraudulent chargebacks?
- How do different fraud prevention measures impact the rate of both legitimate and fraudulent chargebacks?
1.5 Research Hypothesis
The following research hypothesis was developed and tested for the study:
Ho: There is no statistical significant relationship between charge back fraud and E-commerce activities.
1.6 Significance of the Study
The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:
Firstly, the paper will benefit major stakeholders and policy makers in the Commerce sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.
Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analysed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organisations used as a case study.
Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.
1.7 Scope of the Study
The study is delimited to inter switch Nigeria. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.
1.8 Limitations of the Study
The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.
1.9 Organization of the Study
The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.
Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.
Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.
Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.
Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.
