How Merchants Can Reduce Credit Card Fraud

If you operate a retail or e-commerce business, accepting all major credit cards and electronic checks is a required method of payment. However, when deciding to accept electronic payments, business owners should also consider the potential cost of fraud. Studies have shown that traditional and online merchants have lost billions of dollars in fraudulent transactions. Today, technology provides proven methods to identify and prevent fraudulent transactions.

Fraud can take many forms. Needless to say, fraud is bad for business. If you are processing a fraudulent sales order when you discover the credit card has been stolen, you have already shipped the product. Fraudulent orders usually result in a chargeback to the customer’s credit card at your business. Unfortunately at that point you have delivered and lost your product, you have lost the income from the sale and to top it off; You will receive a chargeback fee from your credit card processor. I am sure we can agree that it is necessary to identify and stop a fraudulent order before delivering your product. Fortunately for the merchant, there are many steps and processes that can be taken to reduce and eliminate credit card fraud.


1. Address Verification Service (AVS) – is a simple and easy process to reduce your chances of accepting a stolen credit card. When you process a credit card transaction; make sure you enter the cardholder’s billing address and zip code. Manual non-slip transactions (Internet and MOTO) will require you to enter cardholder information. However, card-present (swipe) transactions will not. Once you’ve captured the cardholder’s billing address and zip code, you’re ready to process the sale. Your point of sale system will verify the AVS with the card issuing bank. You may receive mailing address only correspondence, postal code only correspondence, or address and postal code correspondence. If you do not receive an AVS correspondence, you should consider declining the transaction. About 80% of fraudulent transactions in the United States are AVS mismatches. Keep in mind that most AVS systems can be configured, so be sure to check your AVS settings. The implementation of AVS can have a major impact on reducing credit card fraud.

2. Card check (CVV / CVV2) – is similar to AVS. CVV is the 3-digit code on the back of a credit card (4 digits for American Express). Like AVS, CVV is entered at the point of sale. The cardholder’s CVV code is verified by the card issuing bank when processing the credit card sale. If you do not receive a CVV match, you should consider declining the transaction. Online merchants should make CVV a mandatory field.

3. Use a threshold management service – The management of the thresholds allows the merchant to define the parameters of the transactions that he will accept. For example, transactions can be filtered based on amount invoiced per transaction, number of transactions invoiced, frequency of transactions, average user ticket, etc. Transactions marked as a potential fraudulent transaction will require additional review by the merchant. Threshold management services are generally available as an add-on service.

4th Review orders from free email accounts – Fraudsters and thieves like to hide. One of the easiest ways to hide the identity of a thief is to use a free email account. Most fraudulent transactions use a free messaging service. Merchants should not refuse all transactions from a free courier service. However, you might want to take a closer look at these commands.

5. Review orders with a shipping address other than the billing address – The thief with the stolen credit card may have the owner’s billing address and zip code. If so, you will receive an AVS and CVV correspondence on their order. However, in order to receive your product, they will request that the order be shipped to a different address. Merchants should review all orders with a different shipping address and billing address. If the ship to be addressed is a foreign country, pay even more attention to the order.

6th Review international orders / foreign credit cards – If your business model requires you to ship to foreign countries, you need to get an international merchant account. Since non-domestic orders have a higher fraud rate than domestic orders, having an international merchant account will provide you with a higher level of protection. In addition, an international merchant account will allow you to pay in the local currency. If you need a domestic and international merchant account, you should use a load balancing payment gateway. Load balancing allows the merchant to use multiple merchant accounts in a single payment gateway account.

7th Understand that an authorization code does not mean the credit card is not stolen – An authorization code is provided when the transaction has been approved. However, an authorization code simply means that the credit card is valid and has credit available to process the transaction. Ultimately, as a business owner, it is up to you to decide whether to accept or reject the transaction.

8th. Use an advance fraud protection service – Advanced fraud protection services allow the merchant to block transactions by IP address, country of origin and other fraud filters. Advanced fraud protection services are generally available as an add-on service.

9. Use a PCI compliant data storage service – Merchants who need to store customer credit card data should use a PCI compliant data storage service. A PCI compliant data storage service allows merchants to transmit and store customer payment information in a PCI Level 1 certified data facility. Once the customer record has been transmitted and securely stored, the merchant can then initiate transactions remotely without having to directly access credit card or electronic check information. This process is accomplished without the merchant storing the customer’s payment information in their local database or payment application.

ten. Review and implement PCI (Payment Card Industry Standards) policies – Merchants can view PCI standards online at If you’re using a PCI compliant point of sale solution and you don’t store payment data, you’re already in good shape. However, merchants should contact their merchant account provider for more information.

Fraud prevention is a necessary activity for both traditional and online merchants. Exposing your business to fraudulent transactions and high chargeback rates is bad for business and could cause you to lose your merchant account. Leading real-time payment gateway services provide advanced fraud protection tools. However, there are many fraud prevention techniques that can be implemented at no additional cost.

Main real-time payment gateway services

1. Planetauthorize (US and international)

2. Authorize.Net (US national)

3. PlugnPay (US national)

4. Skipjack (United States national)

5. eProcessing Network (US National)

Source by Ricky Bracken

İlgili Makaleler

Bir cevap yazın

E-posta hesabınız yayımlanmayacak. Gerekli alanlar * ile işaretlenmişlerdir

Başa dön tuşu

Reklam Engelleyici Algılandı

Lütfen reklam engelleyiciyi devre dışı bırakarak bizi desteklemeyi düşünün