November 1, 2015
With the EMV liability shift now in effect, merchants in the United States are now liable for card-present fraud if they are not EMV chip & PIN compliant.
While fraudsters will take advantage of the lag for all merchants to get setup with increased EMV security, they are also on the move.
They will look for other opportunities to exploit credit card security, making online merchants a very promising target.
By 2018, consoling firm Javelin Strategy & Research predicts that card not present fraud, which includes online business is expected to be nearly four times greater than POS fraud in the United Sates. As a result of the increase in online fraud, merchants who are unclear on the risks of online credit card acceptance could get caught in the fraud crossfire.
Merchants should avoid becoming a part of growing fraud in the United States by gaining a clear understanding of the current fraud landscape. Merchants should then, develop an action plan based on these insights to reduce the risks of cyber security threats.
Fraudulent credit-cart transactions typically happen when stolen credit card information is used to make online purchase. Merchants with online stores will typically see losses of the value of the merchandise sold, and the original charge amount. Other losses include damaged reputation, chargebacks fees (ranging from $25-$100)…etc.
For merchants with lower priced goods, recovering these products may not be worth the cost of shipping them back. For higher priced goods, products can sometimes be recovered but if the product is delivered, merchants need to take police action.
Merchants can combat fraudulent transactions, by requiring additional verification information to authenticate customer’s transactions. This can be done by adding billing information, the credit card’s security code and by activation 3DS or 3D Secure technology. Verified-by-Visa is an example of this technology.
Merchants may have concerns about adding these new steps as they may discourage customers from completing transactions. Despite this thought, a few missed conversions are better than the loss associated with fraud.Merchants who experience a lot of chargebacks are actually monitored by their acquiring banks. Too many chargebacks can create higher processing fees, holding merchant’s revenue and even account termination.
Working with a consultancy or an information systems auditor can help merchants find the right balance between increased steps for checkout and the most robust fraud screening process.
With the increase in online fraud and much information available to fraudsters to commit crimes, merchants need to take action before frausters do.
Merchants can combat online fraud by understanding the most common types of online fraud, managing chargebacks and implementing strong security protocol.
For those who need help with implementing online security measures, we recommend working with an information systems auditor or a business that specializes in this area.
If you have any questions regarding online fraud, please feel free to contact our support team.