If you operate a retail or ecommerce business, accepting all major credit cards and electronic checks is a required method of customer payment. However, when you decide to accept electronic payments, business owners must also consider the potential cost of extortion. Studies have shown both conventional and online merchants have lost billions in fraudulent transactions. Today, technology provides proven methods for identifying and preventing fraudulent transactions.
Extortion can come in numerous forms. Needless to say misrepresentation is terrible for business. If you process a fraudulent customer order when you discover the credit card was stolen you have already shipped the item. Fraudulent orders usually result in a customer credit card chargeback to your business. Unfortunately, at that point, you have delivered and lost your item, you have lost the income from the sale and to top it all off; you will receive a chargeback fee from your credit card processor. I'm sure we can agree there is a strong need to identify and stop a fraudulent order before you deliver your item. Fortunately for the merchant, there are numerous steps and processes that can be implemented to reduce and eliminate online credit card fraud prevention.
6  WAYS TO REDUCE CUSTOMER CREDIT CARD Extortion
1. Address Verification Service (AVS) - is a simple and easy to implement process to decrease your chances of accepting a stolen credit card. When you process a credit card transaction; make sure you capture the card holder's charging address and zip code. Manual non-swipe (Internet and MOTO) transactions will require you to capture card holder information. However, card present (swipe) transactions won't. Once you capture the card holder's charging address and zip code you're ready to process the sale. Your retail location system will verify AVS with the card issuing bank. You can receive a street address coordinate just, a zip code coordinate just or a match on street address and zip code. If you don't receive an AVS coordinate you should consider declining the transaction. Approximately 80% of fraudulent transactions in the U.S. are AVS mismatches. Keep as a main priority, most AVS systems can be configured so be sure to check your AVS settings. Implementing AVS can have a major effect on reducing credit card misrepresentation.
2. Card Verification (CVV/CVV2) - is similar to AVS. CVV is the 3 digit code on the rear of a credit card (4 digits for American Express). Like AVS, CVV is entered at the retail location. The card holder's CVV code is verified by the card issuing bank when the credit card sale is being processed. If you don't receive a CVV coordinate you should consider declining the transaction. Online merchants should make CVV a required field.
3. Use a Threshold Management Service - Threshold management allows the merchant to set parameters for the transactions they will accept. For example, transactions can be screened based on the measure of money charged per transaction, the number of transactions charged, transaction frequency, average user ticket, etc. Transactions that are marked as a potential fraudulent transaction will require extra review by the merchant. Threshold Management services are usually available an extra service.
4. Scrutinize 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 email service. Merchants should not decline all transactions from a free email service. However, you might need to provide those orders with more scrutiny.
5. Scrutinize Orders with a different Ship to address than Bill to address - The thief with the stolen credit card may have the owners charging address and zip code. If so, you will receive an AVS and CVV coordinate on their order. However, to receive your item they will request the order to be shipped to a different address. Merchants should review all orders with a different ship to and bill to address. If the ship to address is a foreign nation give even more consideration to the order.
6. Scrutinize International Orders/Foreign Credit Cards - If your business model requires you to ship to foreign countries you should acquire an International merchant account. Since non domestic orders have a higher rate of extortion than domestic orders, having an International merchant account will provide you with a higher level of protection. In extra, an international merchant account will permit you to settle in the neighborhood currency. If you require a domestic and international merchant account you should use a payment gateway with load-adjusting. Burden offsetting provides the merchant with the capacity to use multiple merchant accounts in a single online payment gateway .