Merchant's Role in Payment Fraud Prevention & Detection | Transaction Services

It’s exciting when a new customer places a large order and the credit card goes through without a hitch. Things aren’t so wonderful the following day when a chargeback takes place because an unauthorized individual used credit card data that was obtained by fraudulent methods. In order to protect yourself and others from this type of event, it pays to take a few precautions. Here are a few suggestions to keep in mind.

At the Register

Credit card processing fraud begins the moment that a customer swipes the card through the scanner. As yet you don’t know that the fraud is happening, but what happens in the next few moments will make things clear. That’s because your system is set up to require information that is not found on that stolen card.

Even if you’ve seen the individual before, it pays to ask for a picture ID before you process the payment. Your goal is to determine if the image on the ID is close to the face before you. It also helps to compare the signature on the back of the card with the one on the ID.

In some cases, you may find that the cardholder has chosen to write a phrase like “please ask for ID” in the signature line on the back of the credit card. You should be able to tell if the handwriting between the two documents is a close match. If something seems to be wrong, it never hurts to decline the transaction and notify the card issuer of what you suspect.

At Your Online Store

Having your online store does make it easier to connect with more customers. Even local ones may choose to use this service when they are not in the mood to stop by your brick and mortar location. For their convenience, you do include acceptance of credit and debit cards as forms of payment.

Since you can’t see the person attempting to make the purchase, it pays to take some steps that aren’t necessary during a face to face transaction. The focus is on what type of information your system must receive and verify before the purchase is approved.

As part of that purchase process, the customer must enter some type of data other than what is found on the card. The data could be the last four digits of the owner’s Social Security number, or it could be the zip code associated with the account. Some systems allow for the input of the house number associated with the cardholder’s address.

The actual cardholder will have no problem entering the information; a thief will have to venture a guess and it probably won’t be the right one. At this point, your system can log the usage and report it to the card issuer. That will prevent more fraudulent use from occurring and allow the issuer to contact the legitimate cardholder.

Remember that when it comes to the prevention of credit card processing fraud, it’s not just about finding that you have less money in your operating account than you expected. It’s also about protecting consumers who could end up being the victims of identity theft. Talk with an expert about the range of safeguards to include in all your card transactions, whether they are online or in person. Those extra steps will not be a big deal to your customers, but they will go a long way toward reducing the risk of being defrauded.