Simple steps merchants can take to avoid becoming a victim of fraud.

Online payment fraud has become a big concern for the retailer and the consumer. It was the top concern, including 44% of executives, and It increased by 14% over just 12 months from 2018 to 2019. More global research has found that it will exceed $US 22 billion by the end of this year. Fraud is being driven by changes in technology, how people use devices, and the intelligence of the cybercrime organisations. There are so many different ways to access confidential information and perpetrate online payment fraud that the landscape can seem daunting and overly complex.

The truth is that there are equally intelligent solutions, platforms and steps that can be taken to protect against online fraud. Where there are threats, there are solutions. Many of these solutions are embedded into the technology used by payment platforms, developed to mitigate the threat. Others steps are as simple as changing your behavior and awareness so you to determine whether someone is committing fraud or whether an action you’re taking is going to put you at risk.

7 steps to minimising online fraud

1. Use a reliable payment gateway

There are quite a few different payment options available on the market today, but the best way to protect your business and your information is to use a payment gateway. These solutions are embedded within the digital economy, built to withstand the threats that affect the market and to provide their customers with secure peace of mind. The right payment gateway will include a variety of services that are dedicated to security and to ensuring that transactions are protected along the value chain. You’ll want to work with one that has some of the biggest boxes ticked such as Card Verification Value (CVV), 3D Secure, Risk Scoring, and PCI Level 1.

2. Pay attention to the acronyms

3D Secure and Card Verification Value (CVV) are powerful tools designed to make payments more secure for both you and your customer. 3D Secure is designed to add on an extra layer of security to your online transactions. 3DSecure requires the user to authenticate a transaction using a second method apart from entering the 3-digit security numbers on the back of their card. Typically, most banks send an SMS with a code that user must enter on the authentication page to validate the transaction. CVV asks for the user to enter in the CVV numbers on the back of their card. This is designed to bypass fraudsters who have only got a copy of the front of a card as they can’t see the CVV numbers on the back. It isn’t as effective a security tool today as it was in the past, but it does offer just that extra slice of security that can mean the difference between being hacked or staying secure. Never give your CVV number to anyone unless it is s secure transaction and a trusted vendor. 

3. Deploy a fraud detection solution in addition to 3D Secure

A good risk management system will help you detect fraudulent patterns in your transactions. It scans incoming transactions and then applies certain rules that are tailored to your business to score the transactions. Based on the scoring algorithm a transaction can then be judged to be safe or risky. Risky transactions should be declined or, if you want to optimise conversion, flag the order manually for review by your customer services team. Some solutions will allow you to blacklist certain cards and email addresses which is immensely helpful, and you can ask your payment gateway if they offer a risk management solution that you can use to further enhance your security.

4. Have chargeback protection in place

As a merchant, the three features mentioned above also help protect merchants from chargeback fraud which is a significant benefit. Chargeback fraud can cost you a lot of time, money and unnecessary frustration, it can also be managed through the use of a reliable payment gateway that offers you protection and support. It’s a good idea to read up on chargeback fraud, how it works, what it means for the business, and why it is important to plan ahead to ensure you can manage it correctly. 

5. Be aware of card testing

There are several warning signs that could indicate that your business is being targeted for fraud and one of these is card testing. As so many card details have been leaked to the internet thanks to hacks and breaches and illicit information sales, there are plenty of chancers who have access to valuable credit card data. To ensure they have a valid card, and to see if they can get away with spending the money, they engage in card testing.

They buy cheap items or small things and run cards across the purchase to see which ones stick. When a card works, they’ll then go back into the online store to spend more money. This can really hit your business hard, especially if the transaction goes through and you’re not only the victim of fraud but of a chargeback. Some payment gateways will detect if a card testing attack is taking place and shut them down, but if an issuer detects it, they may block the merchant completely until the situation is resolved.

6. Fake identity fraud

This particular threat is difficult to detect and frustrating to deal with. Sometimes known as ‘synthetic identity fraud’ this transaction is perpetrated by someone who doesn’t exist. They open a fake account with a fake name, spend the money, take the goods and disappear. The bank realises that the entire thing was a scam and they either make the merchant pay or bear the cost burden themselves. The option they choose is entirely dependent on the evidence, situation and the protections that the merchant has in place.

7. Ensure you are compliant

To protect your data and your customer, work with a payment gateway that has proper PCI, POPI and GDPR compliance standards in place. Honestly, protecting personal information and data has never been more important, nor has protecting your reputation and business. With these controls in place, you know that you are embedding the best possible security controls and staying ahead of the latest threats and compliance requirements.

You don’t have to feel like you’re facing down the threat of online fraud alone, or that it is too risky to start your own online business because the statistics are terrifying. If you are aware of the threats and protect against them with the latest technology and services offered by a reliable payment gateway, then you are ahead of the game. Partner with companies that understand the business you are building and that have the capabilities to take you where you want to go.