What factors are contributing to the increased chargeback rate for PingPong (Financial Software)'s e-commerce payment solution in the European market?

Introduction

PingPong's e-commerce payment solution is facing an increased chargeback rate in the European market, potentially impacting revenue and customer trust. To address this issue, I'll employ a systematic approach to identify, validate, and resolve the root cause while considering both immediate and long-term implications.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a recent change in the European market. Has there been any significant regulatory change in the EU payment landscape recently?

Why it matters: Regulatory changes can significantly impact payment processes and security measures. Expected answer: A new PSD2 regulation was implemented last quarter. Impact on approach: If true, we'd need to focus on compliance-related issues.

• Considering user segments, I'm wondering if this is affecting all merchants equally. Are we seeing higher chargeback rates for specific types of merchants or product categories?

Why it matters: This could indicate issues with particular merchant types or products. Expected answer: Luxury goods and electronics have seen a higher increase. Impact on approach: We'd need to investigate these specific categories more closely.

• Thinking about recent product changes, have we rolled out any updates to our fraud detection system in the past few months?

Why it matters: Changes in fraud detection could lead to false positives or negatives. Expected answer: A new AI-based fraud detection system was implemented two months ago. Impact on approach: We'd need to scrutinize the new system's performance and accuracy.

• Considering the metric itself, has there been any change in how we define or calculate the chargeback rate?

Why it matters: Changes in measurement could lead to apparent increases without actual changes in performance. Expected answer: No changes in the definition or calculation method. Impact on approach: We can rule out measurement issues and focus on actual performance changes.