Four Effective Ways To Protect Your Online Business From Card-Not-Present Fraud

Aug 18, 2017

Online payments are classified as card-not-present (CNP) transactions because a customer doesn’t physically present the card when making a purchase. Although remote sales are convenient for both the buyer and seller, their anonymity makes them significantly more susceptible to fraud than card-present payments.

Whether you run an established firm or a cash-strapped startup, e-commerce fraud is a disruptive waste of time and money. Nevertheless, you can avoid the hurdle by following the tips below.

  1. Address verification

One of the most common indicators of a potentially fraudulent transaction is a disparity between a customer’s billing and delivery addresses. While it’s not impossible for these two addresses to be different, having something delivered to Los Angeles when the buyer’s card is registered in New York may suggest a case of identity theft.

An Address Verification System (AVS) is the most common method to reduce the risk of selling to a criminal. Many payment processing companies also offer commercial anti-fraud services that automatically compare the two addresses and warn you of any dubious orders.

If you suspect an order is illegitimate, contact the customer directly and have them confirm all the essential details.

  1. 3-D Secure checks

Originally introduced by Visa as “Verified by Visa,” 3-D secure is a security protocol that typically requires customers to enter in another password to authenticate their card.

3-D secure was unpopular at first because it prolonged the checkout process and consequently resulted in high levels of shopping cart abandonment. Today, however, the customer’s card issuing bank decides which transactions will be required to provide the password, based on factors like the value of goods, time of payment, and how often the cardholder shops with the merchant.

  1. Declined transactions

E-commerce fraudsters rarely employ brute-force tactics, but a desperate criminal will likely look to exploit any open windows. Malicious software can be designed to run in the background, tediously trying out one credit card number after another.

A sudden increase in the number of declined transactions is often a fraud red flag. Although an IP checker may help identify if the orders are originating from the same terminal, the easiest means to stop this type of fraud is to limit the number of declined transactions allowed, before blocking a user.

  1. Chargebacks

According to Global Risk Technologies, 86 percent of all chargebacks are placed fraudulently, usually by customers who receive the goods or services, but don’t want to pay.

Once a fraudster initiates a chargeback, the card-issuing bank forwards the dispute to your bank, actually reversing the sale. At this point, you can argue your case to your bank and prove that the disputed transaction was, in fact, legitimate.

Regardless of the outcome of the resolution, however, a chargeback will likely cost you money, either due to reversed funds, chargeback fees or both. Thankfully, many e-commerce payment processors offer chargeback prevention services, which help merchants to detect disputes quickly and challenge them in time.

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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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