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The Role of Retailers in Preventing Credit Card Fraud


To be successful in retail or e-commerce, you must accept all major credit cards and electronic checks. However, company owners should consider fraud’s cost when deciding whether to accept electronic payments. According to studies, Online, and offline businesses have lost billions to fraudulent purchases. Technologies exist now that have been shown to detect and prevent financial fraud.

There are various types of fraud. In business, imitation is a horrible thing. When you realize a stolen credit card was used for an order, you may have already dispatched the goods. A chargeback occurs when a consumer disputes a demand they know to be fraudulent. By that time, you’ve already sent and misplaced the item, lost the sale’s proceeds, and will be hit with a chargeback cost from your credit card company. We can both agree that it is crucial to spot a fake order and cancel it before sending out the goods. Fortunately, various methods are available to merchants for combating credit card fraud.

How to Reduce Credit Card Fraud by Customers: 10 Steps

One straightforward method to reduce the possibility of accepting a fraudulent credit card is the Address Verification Service (AVS). Ensure you get the cardholder’s billing address and zip code when processing a credit card transaction. It is necessary to manually gather cardholder information for non-swipe transactions (Internet and MOTO). Card-not-present (swipe) purchases, however, will. The deal can be finalized after the cardholder’s billing address and zip code have been obtained. The issuing bank will verify AVS through your POS system. You can get a match based solely on the street address, the zip code, or both. You might refuse the transaction if you do not receive an AVS match. AVS mismatches account for over 80% of fraudulent transactions in the US. Remember that most AVS systems are tunable, and double-check your AVS preferences. The use of AVS can significantly reduce credit card fraud.

2. Card Verification Number/Value (CVV/CVV2) is much like AVS. A credit card’s CVV is the last three digits of the card’s number (four for American Express). CVV is also entered at the register, just like AVS. The issuing bank will check the cardholder’s CVV code when purchasing using a credit card. You may want to cancel the purchase if the CVV number does not match. The CVV number should be a mandatory entry for all online purchases.

Third, employ a service for threshold management, which enables the merchant to establish limits on the types and amounts of transactions they will accept. Screening can be performed on transactions according to many criteria, such as the total amount charged, the number of transactions, the frequency of commerce, the average user ticket, etc. If a purchase is flagged as suspicious, the retailer must investigate it further. In most cases, Threshold Management is an optional extra.

Inspect Purchases Made Via Free Email Accounts – Crooks and cons like covert operations. Using a free email address is one of the most straightforward ways for criminals to conceal their true identities. Free email services are widely used in illicit financial dealings. Online stores shouldn’t automatically reject purchases made through free email providers. But you should probably check those orders out more thoroughly.

5. Carefully examine any orders in which the Ship-to address differs from the Bill-to address; a credit card thief may know the cardholder’s billing address and ZIP code. If so, you’ll get a matching AVS and CVV on their purchase. They want your product but must have it delivered to a different address. The retailer should double-check all orders with an alien ship-to and bill-to address. Pay extra attention to the order if the country of the ship-to address is not your own.

6. Investigate Orders From Abroad and Payments Made With Foreign Credit Cards – Open an International Merchant Account if you want to ship internationally. An International merchant account provides better security due to the increased fraud rate of non-domestic orders. Settling in the local currency is made possible with an international merchant account. If you need a domestic and foreign merchant account, a payment gateway supporting load balancing is your best bet. With load balancing, a business can use several merchant accounts through a single payment processor.

It’s important to remember that just because you’ve been given an Authorization Code doesn’t imply your credit card hasn’t been stolen. However, a credit card authorization code merely verifies that the card is legitimate and has sufficient funds to cover the transaction. As the company’s owner, you have the final say on whether or not to proceed with the deal.

8. Use a fraud prevention solution that offers advanced features such as blocking transactions based on the customer’s IP address or country of origin. The most up-to-date fraud prevention features are typically provided as an optional extra.

Use a PCI-compliant data storage service for client credit card information if your business needs to keep it on file. With the help of a PCI-Compliant Data Storage Service, companies may securely transmit and store their customers’ payment data in a PCI Level 1 compliant data center. After securely receiving and storing consumer data, business owners can start transactions remotely without directly accessing sensitive data like credit cards or electronic check numbers. The transaction is completed without the merchant needing to store the customer’s financial data locally in a database or payment processing program.

Merchants can learn more about PCI (Payment Card Industry) policies at pcisecuritystandards.org. 10. Review and implement PCI (Payment Card Industry) policies. You are already in good condition if you utilize a PCI Compliant point-of-sale solution and are not storing payment data. However, business owners can learn more by contacting their merchant account provider.

Both brick-and-mortar and virtual stores need to take measures to guard against fraud. Losing your merchant account is a real possibility if you consistently experience high rates of fraud and chargebacks. The best real-time payment gateways have sophisticated fraud detection and prevention features. However, several fraud-prevention strategies can be implemented without incurring any extra expenses.

Leading Real-Time Payment Processing Gateways

1. Planet Authorize (both in the United States and abroad).

Second, Authorize.net (in the US)

PlugnPay (U.S.-based) 3.

4 – Skipjack (United States)

Five, the United States-based eProcessing Network

SaleManager Merchant Services is led by Ricky Bracken, who serves as President & CEO. Small and medium-sized enterprises can benefit from the enterprise-level payment solutions offered by SaleManager.

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