What Merchants Need to Know about Card Not Present Fraud

Jan 29, 2016

The majority of the payment industry is aware of the risk concerning card not present fraud. However, the number of merchants that truly understand what card not present fraud means for them is less clear. Are they really able to identify the different types of card not present fraud that they are facing? The statistics from recent study True Cost of Fraud, released in the LexisNexis, can help merchants better understand the realities of card not present fraud.

What do you think of when you hear the word “fraud”? A man with a mask robbing a bank? Some other form of criminal fraud? The truth is that fraud is a much broader term that includes a variety of methods used to separate merchants from their profits. Merchants should know that the industry’s use of the word “fraud” includes: friendly fraud, identity theft (unauthorized transactions), fraudulent requests for returns or refunds and lost or stolen merchandise.

In truth, merchants lost $2.23 for every dollar of fraud; this is actually a drop of $0.85 from the previous year and the lowest rate in the last six years. In previous years, this number has been as high as $3.10 per dollar of fraud. According to chargebacks911.com, “…the percentage of revenue lost to fraud has actually increased in the last year. Revenue loss has increased sharply to 1.32% annually, a 94% jump from the previous year.”

While many merchants use fraud filters, the outcome does not always work in their favor. 75% of transactions flagged as fraud need to be verified through a labor-intensive manual review. However, despite these efforts, 25% of declined transactions are false positives for fraud – more loss for the merchant. In addition, with the average ecommerce merchant using at least five fraud mitigation solutions, the cost is estimated to be $100,000 per year. Managing fraud is expensive.

According to the LexisNexis study, it is seven times harder to detect and prevent card not present fraud in comparison to card present transactions. Why? The absence of personal interactions makes it difficult for the merchant to validate the shopper’s identity. In addition, the recent adoption of Europay MasterCard Visa (EMV) standards have pushed the risk of fraud from card present transactions to card not present transactions. Card not present fraud rates have begun to skyrocket, since career criminals need to find a new venue for their money making endeavors.

If your business does not have sufficient fraud detection methods, your card not present transactions will be more susceptible to fraud. Keep in mind that many card not present prevention methods can easily be manipulated, leaving merchants in a vulnerable position. If this is a concern for you and your business, it might be time to look into what a chargeback protection provider, like EMB, can do for you.

High risk provider, emerchantbroker.com, offers merchants the chargeback prevention and protection programs they need. “This is your first line of defense. Be notified of disputes and act immediately to save your funds from being returned on invalid claims. Our Prevention system warns you early enough that you can become a pivotal part in the Chargeback process.”

Don’t let chargebacks eat away at your bottom line. For more information on how to be notified immediately and retain your profits, contact the team of specialists at EMB today. The application process is fast, simple and hassle-free.

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.