Fraud Management Techniques Every Business Owner Should Know

Mar 16, 2018

Identity theft and fraud cost consumers more than $16 billion per year. A large chunk of this is due to credit card fraud and right in the middle is the business owner. Angry customers tend to vent their frustrations at the merchant, and high-risk merchants experience this more often than others. In order to prevent cases such as these, merchants are recommended to safeguard themselves and their customers against fraudsters and here’s how.

Clear Out The Loopholes

Fraud issues that plague merchants are tough to handle as it is, but when these issues arise from staff it makes things all the more tricky for an employer. Whether the fraud arises from staff dishonesty or a lack of following the laid down procedures, it reflects poorly on the merchant. One way to resolve this is to ensure that there are proper procedures in place and that there is no room for error. A foolproof system provides employers with peace of mind and also gives employees the confidence that they’re doing their jobs correctly. It also makes it easier from an operational perspective to identify suspicious transactions.

Choose Chip Cards And Educate Customers

Visa reported a drop of 70% in their card fraud when chip card technology was introduced. This is because the transactions are embedded on a microchip and before a transaction goes through, customers are required to enter their unique pin. Although card skimming is still prevalent, the chip technology makes it a little more difficult to duplicate unless the fraudster gains access to the unique pin as well. For online purchases, card companies have made an SMS verification part of the purchase procedure in order to curb online card fraud. Customers who apply for new credit cards can rest assured that these will automatically feature the chip technology, thanks to the EMV regulations.

Card Not Present Safety Measures

Although card companies have introduced the chip technology to their cards, the function does not really feature online. Apart from the verification SMS, there is little else card companies can do to secure card-not-present transactions. Merchants have the responsibility to make their online payment portals more secure by introducing additional security checks and verification layers. Some are even going to the levels of introducing multi-level captcha verifications to ensure that their site isn’t targeted by spambots. Thankfully, Google now warns visitors if a site is not secure which compels the website owner to introduce extra layers of security. Password managers and regular updates to both the site and its extensions will ensure the site is less vulnerable to attacks.

Merchants may not be directly responsible for fraudulent activity that takes place with their devices or online payment portals, but it will do reputational damage if word gets out. It also strengthens the financial institutions’ case against merchant services for that specific industry, especially the high-risk ones. Although consumers are responsible for keeping their information secure, the onus is on the merchant to protect their own reputation. By following a few simple steps the opportunity for fraudsters can be significantly reduced.

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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 on 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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