Strategies for Reducing Online Fraud Risk
It has been a month since the official EMV switch and everyone is watching closely to see how the transition will play out. Merchants that do not have EMV chip readers are now liable for all losses that result from cyber fraud so many are making the transition to EMV chip readers as soon as possible. As merchants change their plans, so are cyber criminals. Hackers are now focusing on online transactions instead of cards used in in-store purchases since that field has narrowed with fewer targets available.
Card-not-present fraud, including online fraud, is expected to increase by 400 percent by 2018 across the U.S., according to some estimates. It is important for eCommerce businesses to understand the ways of reducing online fraud risk.
The first thing to do is create a plan that encompasses what you learned about the causes of fraud, and the financial regulations put in place. E-commerce businesses that experience merchandise value loss and original charge amount loss. The cardholder has up to 120 days to dispute a fraudulent charge, which is more than enough time for you to make the sale, collect the money (since credit card payments are typically processed within a day or two), and ship the product or provide a service to your customer. From here, business owners file police reports for what amounts to stolen goods.
When the customer sees the fraudulent charge, he or she then notify the credit card company or bank, which verifies the claim. The customer then notifies the business’ bank and the business owner receives a chargeback and returns the money to the customer. Accruing many chargebacks can land your business on a high-risk list.
Keep your business and transactions safe by implementing extra security features, like requiring additional verification information. The trick is to find the balance between security and being annoying. Additional steps at checkout can deter some customers and leave you with abandoned carts. In the long run, this is a small price to pay, but you can also keep this to a minimum by keeping an eye on purchase trends and tweaking your plan.
The ins and outs of payment processing can be confusing, and the new EMV regulations have not helped clarify things. The best way to audit your eCommerce payment processing system is to reach out to professionals who can provide the proper insight.