With the world shifting to online payments, fraud cases have also proportionally increased. Card frauds can be described as the theft of funds, products or services involving the use of credit or debit cards.
Business owners who sell or transact online usually bear the brunt of card fraud. This is often the case when it’s a ‘Card-Not-resent’(CNP) transaction as it’s much harder to verify the identity of the person using the card. This is contradictory to the main aim of running a business which is to make sales without losing money in the pipeline.
Prevent Online Card frauds in Your Business
Identify & Safeguard Your Business from Online Fraud
With this said, only a small percentage of card transactions are fraudulent. But they can still cost millions in losses for business owners and card owners.
The most common types of fraud include:
- Card Theft Scams – This occurs when professional fraudsters steal cards or card information and try to use it to buy products. They will then either be the consumers or resellers of the products to unsuspecting buyers. They may also claim to have canceled a service e.g a holiday booking and ask for a refund for the amount paid by the genuine cardholder.
- Friendly Fraud – This occurs when a client makes a payment to a business and then consumes the product or service. Once this is done, they then issue a charge-back claiming not to have received the product or service or claim that their card was used fraudulently. While this mostly occurs online, there are instances where cardholders will try to initiate charge-backs for card-present transactions.
Ways To Prevent Online Card Frauds In Business
Looking out for suspicious email addresses
If the email used contains too many characters or mismatched letters e.g firstname.lastname@example.org, ask for the customer to send verification details. This is easier to do for smaller e-commerce sites where the orders can be manually checked.
Require a Security Code for all Cards
Most online card payment processes require consumers to input the CVV number. Depending on the card issuer, the consumer may also be asked to provide a One Time Password – OTP
Assign tracking numbers to orders and require signatures at delivery
This ensures you can track the transaction from when it was initiated to when the customer acknowledges receipt of the item.
When in doubt, ask for verification
Trust your gut. If you are suspicious, ask for the customer to provide proof of identification as well as a photo of the card showing the last 4 digits only.
Watch out for warning signs
One of these signs may not be cause for alarm, but it is worth paying special attention if one or more of these things happen:
- Large unusual transactions from unknown buyers. If they’re in your store you could ask for additional identification to make sure they are the true cardholder
- Payment with many credit cards with similar or sequential numbers
- Rush orders that need overnight or express shipping
- High volume of transactions on a card over short periods of time
- Transfer of funds to a transaction account or money transfer agency.
Take extra precaution
If you’re unsure a transaction is legitimate you can take some extra steps to validate the order:
- Call the customer to confirm the details of the order
- Use a security program such as MasterCard SecureCode and Verified by Visa – these are an easy and cost-effective way to authenticate a cardholder at the point of purchase with a password
- Reject any order you’re still suspicious of.
Developing your team’s knowledge in identifying and preventing credit card fraud could potentially save you costs in future. Some ideas include:
- Train your employees to look out for suspicious transactions (outlined above).
- Keep up to date with latest scams
- Advise staff of the consequences of credit card fraud for the impacted customers and business. Customers may not have access to their funds for extended periods and businesses could be liable for purchases made on a compromised card
- Protect and limit the impact of
How Pesapal Safeguards Online Businesses Against Fraud
At Pesapal we go the extra mile to protect your business from fraudulent card activity. Having PCI DSS certification, we employ world-class measures to safeguard your money.
Additionally, we provide the following for businesses that process payments through our platform:
- Have a state of the art fraud management system that is able to block suspicious transactions
- Manually check suspicious transactions by our experienced staff
- Risk profile our merchants to ensure that they do not suffer added fraud attacks.
- Inform merchants when a transaction is suspicious so they can ask for verification
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