- 9 October, 2020
Any business selling services or product today pretty much needs to accept electronic payments to be viable. The days of cash only are simply a page in a history book now. Along with electronic payments, the most common digital payment form, by and large, is via a credit card number. So, that means a business has to have a merchant processing account set up to process numbers and corresponding payments charged to them. No surprise, businesses’ merchant processing is just as susceptible to fraud as credit card use is for individuals.
Many like to think that credit card fraud damage is just absorbed by banks, the backers behind credit cards. Unfortunately, that’s not the case. First, the damage is spread back to the economy through an increased cost of essential financial services. Businesses then face either having to absorb the cost to stay in business or add the expense to their prices and pass it along to customers. So, in short, everyone ends up paying for the fraud damage, not just the bank supporting the given credit card account upfront.
Second, business fraud typically doesn’t stop with the card account compromised. Per the small business company, at least $38,000 a year goes into adding more security features, plus another $8,000 in various add-on expenses to get the change completed. Larger corporations take a more painful hit, spending at least $550,000 annually plus another $69,000 on related expenses like insurance, investigations, audits, and similar.
Can it Be Prevented?
Yes, there are very effective ways to prevent credit card fraud today, even within e-commerce platforms. These six tips include the following:
Only accept chip-based credit cards for electronic payment. Europe long ago shifted to EMV-chip cards, significantly reducing fraud in doing so, by two-thirds. The U.S. resisted the shift for years, but fraud is so widespread now, not requiring chip-enabled credit card processing is merely asking for trouble as an easy target.
Actively monitoring customer behavior often finds signs of odd behavior. Businesses that track and proactively look from problems frequently stop fraud before it gets going. Customers who insist on rushing payments, demanding using an old credit card, constantly switching accounts, and trying to buy an assortment of high-end items all at once are a few red flags.
Confirm a Buyer’s ID for high-level purchasing. Many businesses with a high volume of customers frequently require a copy of a formally-issued ID to be provided electronically with a credit card payment. This acts as a deterrent to parties trying to charge on a card, hoping it won’t be validated online.
Watch for the payer’s address. When a user online is trying to make a big payment, a quick way to check for a problem is to compare the billing address with whether the buyer asks for deliveries. It’s one thing if the party is a tourist in a tourist zone, but when the purchase is shipped to Florida and the billing address provided is in Washington, it’s a red flag again.
Always report fraud, even it seems like it won’t go anywhere. The more fraud cases and details said, the easier it is for law enforcement to build a case. Many eBay fraud scams have been solved with 30 or 40 different instances consolidated and the details compared to single out the criminal. It takes time, but each case helps.
Stay in tune with the latest scams and fraud methods. By knowing the ways fraud occurs and how it changes over time, your business can anticipate problems before they happen as may fraud players tend to copy each other, repeating the same method again and again.
As a merchant processing company, Dynamic Merchant Solutions is directly impacted by businesses it serves and the fraud they are exposed to when working as a team to catch credit card fraud. The entire system benefits from lower costs and damages.