The good news for merchants is that there is a boom in online sales, as consumers grow in confidence to purchase goods and services online. The bad news for merchants is that this boom in online sales brings with it a sizable amount of e-commerce and card-not-present (CNP) fraud. Your customers are confident in safely buying online—and sometimes in getting away with online fraud. The struggle for today’s merchant is to determine the best method of credit card fraud detection without driving away customers.
Your loyal customers want fast and easy payment processing. They don’t want to be bogged down with cumbersome data screens, exhaustive password requirements, or multiple email confirmation steps. But if you don’t implement reliable fraud detection procedures, how can you protect your business?
It’s a fine line to tread: add too many layers to your credit card fraud detection system and you’ll risk driving customers away—but not having enough detection methods in place can cause you to lose out to fraudsters.
Ease of Credit Card Fraud
A recent study by Juniper Research titled Online Payment Fraud Whitepaper points to three key reasons for the increase in e-commerce fraud numbers:
- Growing e-commerce market: More online sales opportunities translate directly to more fraud opportunities. E-commerce fraudsters have unlimited fraud options.
- Higher amount of funds in transactions: E-commerce sales span a wide range of price levels. It is not uncommon for customers to spend large sums online, resulting in increased fraud potential and risk.
- Mobile payment popularity: Ensuring security for mobile payments and digital wallets is a huge challenge. Merchants are not prepared for sophisticated hacking methods.
Add to the above the ease-of-use with which customers share their credit card information online and you have the perfect formula for increased fraud numbers—and the desperate need for merchants to focus on credit card fraud detection.
Credit card fraud has become prevalent, and this is how it’s typically done:
- Clean fraud: The fraudster has stolen all the customer’s data, including credit card number, CVV, address, phone number, and any passwords. This data successfully penetrates the merchant’s authorisation and authentication solution.
- Account takeover: The fraudster gains access to the credit card by submitting an update to the cardholder’s information, such as the email address or home address.
- Identity fraud: The fraudster uses personal information such as passwords or phone numbers to access the credit card number.
- Reshipping: The fraudster uses an intermediary, who unknowingly transfers or ships items purchased with a stolen credit card.
The question for you is this: What are you doing right now to detect these credit card fraud methods? Now that you know how easy it is for some unscrupulous consumers to commit e-commerce and credit card fraud, it’s up to you to take steps to protect your customers and your business.
Effective Credit Card Fraud Detection
There is no room for half-measures or partial solutions when it comes to credit card fraud detection. It’s important to be fully committed to tightening all seals in your payment environment. This protects both your customers and contributes to the confidence of the entire e-commerce payment space.
To protect your customers and your business from e-commerce and credit card fraud, think about the methods mentioned earlier: tight password requirements, multiple email confirmation messages, mandatory CVV usage, and keeping your payment solutions up-to-date.
Yes, this all takes work and will likely require some extra customer service outreach on your part. Customers may not adapt well to change, but when you explain to them why you’ve added new steps to the authorisation process and subtly point out the risks of credit card fraud, most customers will feel assured by having an extra email confirmation or an extra checkbox on an authorisation page.
Credit card fraud detection can be as multi-layered and complex or as simple and straightforward as your business requires. The key is in ensuring that you’ve got the appropriate and most effective solutions in place for your unique needs. Contact us with your questions and we’ll provide you with our expert advice on how you can implement the right credit card fraud detection solutions.