How can you prevent prevent payment processing fraud and safeguard your business?
Fraud is among the closest monitored and studied phenomena within the payment industry. This focus results from the huge losses that fraud produces for all parties involved. Fraud continues to be frustratingly difficult to beat in spite of the best efforts to eradicate it.
Today, the prospect of the total elimination of fraud from the ecommerce environment seems to be more distant than ever. High risk merchants have always been aware potential losses from fraud. And now mainstream businesses have the same concerns.
The most recent statistics on the prevalence of card fraud confirms the fact that the efforts being made are insufficient. According to the Nilson Report, global fraud losses reached $16.31 billion in 2014, will continue to rise, and are expected to exceed $35 billion in 2020. In 2014, card issuers covered around 62% of these losses, while merchants were liable for the remaining 38%.
The report also reveals that the United States generated about 21.7% of the total ecommerce volume, but it suffered losses amounting to 7.86% billion, that is 48.2% of the total global amount. This percentage gap between ecommerce volume and fraud losses is made possible by the lack EMV technology which protects against counterfeiting.
Chargebacks are a big issue for you as well. "Friendly fraud" is increasing common as deceitful shoppers dispute legitimate transactions in order to get products or services for free.
Buyers call their issuing bank & initiate chargebacks. The majority of times, the issuing bank will side with their customer against you as the merchant. And your profits go up in smoke.
Cyber-crooks use a variety of means, both high-tech and low-tech, to get their hands on card information. Sometimes, card data is compromised through the hacking of point-of-sale systems. Online merchants can have their database compromised, leading to a leakage of sensitive card information.
Skimming devices installed at ATM or gas pump harvest card information, such as card number and PIN. It is quite common for individuals to lose their private information when malware is surreptitiously installed on their computers. At times, a restaurant employee will use a device to copy the card information and use it illegally.
Last but not least, data breaches at payment processors and large retailers that store card details will supply criminals with plenty of opportunities to commit fraud.
The FTC offers some useful advice on how to reduce the risk of becoming a victim of fraud.
Understanding how fraud occurs and what one can do to prevent it can make a real difference, since increased awareness among both customers and merchants is an important component if any long-term fraud prevention strategy. There are many good weapons against fraud you can implement to protect your business.
Are you interested in keeping your payment processing safe from fraud?
Contact firstname.lastname@example.org today