Security measures for fraud protection: What merchants need to know

Credit security procedures help reduce fraud

By Jean McDaniels 

 

Recent studies show that the U.S. ranks as one of the top countries with the most cases of credit and debit card fraud. As a matter of fact, the Consumer Sentinel Network of the U.S. Department of Justice claims that about 10% of all Americans have been victimized by credit card fraud while another 7% has experienced debit and/or ATM card fraud at least once during their lifetime.

Well, this doesn't come as a surprise since it is a well-known fact that U.S. consumers rely heavily on their credit and debit cards to pay for all of their purchases. Another possible reason why credit and debit fraud is very rampant in the U.S. lies on the fact that it is still not up to par with the EMV (Europay, MasterCard and Visa) standards.

The importance of preventing fraud from a merchant's point of view

While credit and debit card fraud presents a considerable cause of concern for consumers, it can have a more serious and more far-reaching implication for business owners. Merchants have more to lose since they are obliged to accept all losses due to fraud while consumers are protected by law against most credit card liabilities arising from suspicious activities.

The cardholder simply needs to dispute a credit card charge and the issuing bank will automatically send a chargeback to the merchant. If you don't have any physical evidence to dispute the claim, you will absorb all the cost of the transaction which includes the cost of goods sold, the shipping cost, card association and merchant bank fees and administrative cost.

Worse, excessive chargebacks may even tarnish your reputation and eventually affect your business operation. For sure, nobody wants this to happen.

Preventing fraud – How can you do it?

How can you protect yourself and your business from fraudulent card activities? While there is no way to guarantee that you will be 100% protected against such activities at all times, there are some ways by which you can minimize your risk of being victimized by fraudsters. Here are some precautionary measures that you may want to consider:

• Do a manual review. For card present transactions, check the signature at the back of the card, ask for other identification and check if the security features of the card have been altered in any way, especially if you have reason to believe that there is something suspicious about the transaction. For card not present scenarios, don't process the order unless you have all the information that you need.
• Use the AVS and CVM features. You can likewise prevent fraud by using the address verification system (AVS) and card verification method (CVM). The AVS is a security feature that allows you to run an address check on every transaction to prevent fraudulent activities while the CVM prevents suspicious transactions by asking for the verification code that appears on the back of the card.
• Use a secure transaction processing service. You can significantly reduce credit card fraud by using a secure and reliable transaction processing service. So, if you are still in the process of looking for a transaction processing solution, consider looking for a company that has highly advanced fraud protection services and the latest encryption regulations such as those offered by PayMeSecure.

Following these suggestions helps protect your business against fraud; that's a guarantee. Not taking steps to secure transactions for both your business and your customers isn't worth the potential risks to revenue. Moreover, once an effective fraud prevention mechanism is in place, business managers and owners do not have to worry about whether or not their point-of-sale credit and debit system is reliable and effective.


About the author: Jean McDaniels has owned a quick mart for the past 7 years, but recently took a leap of faith with a food truck business of selling burritos. He has found success with using PayMeSecure’s wireless services to help with credit card processing for his business.