Card-Not-Present (CNP) Fraud Is on the Rise

Aug 22, 2017

Card-not-present (CNP) fraud is growing as cyber thieves are becoming more skillful at using both technology and stolen payment card data to defraud retailers all over the world.

Card-Not-Present (CNP) Fraud

According to Research and Markets, the world’s leading market research store, e-commerce merchants, particularly in the US, are dealing with rapid online sales growth. At the same time, the credit card industry is continuing to adopt EMV chip technology. In the wake of these trends, merchants are left vulnerable to CNP fraud.

Hotel gift shops, restaurants, and bars have been targeted by hackers for multiple times over the last several years, the result of which was payment card information loss. Hyatt, Marriot, Starwood, Hilton, Mandarin, and Trump hotels are among the brands that have been affected by recent data breaches.

In February, InterContinental Hotels Group (IHG) reported a breach that appeared to involve only a dozen properties. Now, IHG has released data revealing that cash registers at over 1.000 of its properties were compromised with malicious software developed to gather customer debit and credit card data.

Credit Card Fraud and Chargebacks

Last year, American Express joined Visa and announced its new policies, which aimed to reduce fraud costs for merchants who have been dealing with a dramatical increase in chargebacks since the EMV liability shift in October 2015. American Express reported it wouldn’t require merchants to be liable for in-store fraud on counterfeit transactions under $25.

If you’re dealing with American Express chargebacks, consider applying to emerchantbroker.com to get an opportunity to reduce chargebacks and grow your business. EMB, a reputable payment processor and business funding provider, is voted the #1 high risk processor in the US and is rated A+ by the BBB. eMerchantbroker.com provides merchants with unmatched security and protection from fraud to help them fight chargebacks and increase revenue easily. Moreover, EMB is rated A by Card Payment Options and is named one of Inc. 500’s Fastest Growing Companies of 2016.

According to a recent Visa report, counterfeit fraud is dropping. 39% of merchant locations now have chip-enabled terminals accounting for 49% of total payment volume. Among those merchants, counterfeit fraud is down 52%.

However, based on a 2017 Identity Fraud Study by Javelin Strategy & Research, a research-based advisory firm, card-not-present fraud increased 40%, and account takeover fraud grew by a whopping 61% in 2016. Both types of fraud were caused by the EMV migration in the US. This makes in-store fraud more difficult and, consequently, other options for leveraging stolen information online more appealing.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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