With so many of us transitioning from in-person to online activities, new opportunities arose for cybercriminals to exploit the changing circumstances. The FTC received over 1.3M fraud reports in Q1-Q3 of 2020, resulting in total losses of over $1.5B.
Given the changing environment, credit unions should navigate cybersecurity in the “new normal” landscape with an effective and comprehensive security plan to protect their own data and cardmembers’ data.
Payment gateways or “payment portals” have become essential to the security of businesses accepting payments online. When you’re just starting a business, online fraud can cost you more than a single purchase. According to a 2018 survey, Statista states that “US merchants lost an estimate of 6.4 billion dollars in payment card fraud loss.” Small businesses are no exception. On average, small businesses lost an estimated $155,000 a year. That much money can make or break a new business. That’s why it’s crucial to pick a payment processing company that works for your best interest.
We’ll start by saying that not all payment processors are created equal. Many companies will only offer basic security measures to reduce credit card fraud. In fact, some merchants, like PayPal, don’t provide any seller protection at all! That’s why it’s essential to research and find a payment gateway that offers you quality fraud protection and security.
Today, e-commerce and the digital economy are continuing to grow, so even small businesses need to consider fraud prevention tools. Let’s take a look at some of the ways a good payment gateway can help protect your business from fraud.
Payment Gateway Fraud Prevention Tactics
You can rest easy knowing companies like BillingTree are working 24/7 to keep you and your business secure. That’s why we’ve put together a list of some of the ways a quality payment portal can help protect you.
Address Verification Service (AVS)
You’ve probably had to enter your address along with your payment method at some point. An AVS (Address Verification System) is a security measure that checks if the address entered matches the one the card-issuing bank has on file.
Card Verification Value (CVV)
The CVV (or Card Verification Code) is the 3 or 4-digit code that’s on every credit card. Legitimate sites will never store the CVV information you enter.
Think of this as an extra level of card security. Since this information is only available on the printed card, only the cardholder will have access to it. If a consumer is making a purchase on your site and the CVV isn’t a match, the gateway will deny the transaction, protecting you and your customers from fraud.
Instead of identifying a user by their credit or bank information, payment gateways can also use a person’s computer or personal device to ID them.
These systems can recognize the operating system, internet connection, and even the browser to approve, flag, or decline a transaction. Payment portals can allow you to set your own parameters in which to allow, deny, or simply force a verification process for a transaction automatically.
Flag Large Transactions
The first thing a fraudster might do with a stolen credit card is make a huge purchase before the card can be deactivated. This is bad for both your customer and your business, most likely resulting in you bearing the cost of this fraudulent charge.
A good gateway will allow you to set a flat dollar amount, limiting the damage that can be caused by fraudulent charges. You can also set a limit for the number of failed transactions that go through, giving you better control over your store and your customer’s safety.
Payer authentication (Verified by Visa (VeB) and MasterCard SecureCode), allows cardholders to authenticate online transactions for customers. Like a CCV, this option gives users the chance to create a PIN code to verify their identity. Typically, implementing this type of system provides merchants with chargeback protection and lower interchange rates.
Shipping overseas can be tricky, that’s why it’s crucial to have a payment gateway that uses safety measures for “high-risk” countries. This will typically involve customers being required to call your company to verify their identities before their transactions can be processed.
Fraudsters will sometimes use “Card Number Generators” and try hundreds of valid card numbers to get in and use that card to its limit eventually. Lockout prevention systems will, as the name implies, lock fraudsters out and prevent them from making purchases from your store in the future. Payment gateways can base this on an IP address with numerous failed transaction attempts and failed AVS tests (since generators won’t give fraudsters a proper billing address).
Risk scoring tools are a little more tailored and can be designed to follow a specific set of rules. You can specify these rules to identify a potentially fraudulent charge and force the transaction to be verified before completion.
You can tailor your risk scoring tools to perform a case-by-case evaluation and flag transactions based on a combination of any of the above security measures and more.
With any single security measure, there will always be a way to get around it. By providing you with multiple ways to protect yourself and your customers, payment gateways can help prevent fraud on a case-by-case basis. These systems can automate the process and give you more time to get back to what matters, your business.
Looking for a safer way to accept payments? Request a demo, today!