How Velocity Checks Help Prevent Chargeback Accumulation Due to Credit Card Fraud

Sep 17, 2020

It’s dangerous to pay a deaf ear to fraud and new safety techniques if you run a business prone to payment fraud.

Merchants want as much protection as possible— and adding an extra layer of protection can further reinforce your multilayer strategy.

Velocity checks, for instance, are an important way to deal with fraudulent purchase attempts in your eCommerce website.

To learn how this approach works, it helps to understand how criminals target businesses.

Understanding Credit Card Fraud

Many unauthorized purchase attempts on your website come from fraudsters who specialize in credit card fraud.

But the credit card data comes from their partners in crime and often contains both valid and invalid card info. Many times, a fraudster must test each card number on an eCommerce website to determine if the information is accurate or not.

Rejected cards usually mean the card data is wrong, while all the accepted card data is valid and may be used in oncoming fraudulent purchases. The fraud risk remains until the card owner notices the breach

When criminals test multiple cards and accomplish several fraudulent payments on an eCommerce website, chargebacks begin to pile up, exposing its owner to liabilities.

Merchants can rely on velocity checks to help spot and stop phony purchase attempts.

Velocity Checks: What are they?

Velocity checks are a fraud-protection strategy built to track the rate at which shoppers initiate transactions.

This technology works by spotting and stopping phony purchase attempts based on how a buyer initiates several transactions.

When criminals get their hands on the right card number, they make multiple purchases in a bid to utilize all the funds. For merchants, multiple card tests and fraudulent purchases can mean serious financial losses.

This strategy helps a business analyze customer data based on several factors, such as:

  • Billing Address
  • Shipping Address
  • Email Address
  • Cardholder Name
  • Type of Device
  • IP Address
  • The Card Number

Velocity checks are built to scrutinize the data issued with every transaction and raise red flags for several submissions of the same card data within a specific window.

That way, a business can filter out phony transactions by identifying easily the instances where a would-be criminal is testing cards or attempting numerous transactions with stolen credit card information.

Final Words

Velocity checks are an excellent way to stay on top of any hidden fraud activity threatening to ruin your business’s bottom line.

Most payment security services include velocity checks in their security strategies, but merchants should inquire upfront.

Let us help you get a high risk merchant account today!

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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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