If your business is online, you need to know how to protect yourself from fraud. You can’t afford to have a bad reputation and be shut down by the FTC.
The small business near me is a topic that has been gaining popularity recently. This article will discuss ways to prevent online fraud in your small business.
Accepting credit cards has dangers, particularly for companies that sell online or need customers to type in credit card information.
Fortunately, you have many options for safeguarding yourself and your clients. The three tools we’ll talk about in this post are accessible from almost all credit card processors, so they may be used by any company. Address Verification Service, Card Verification Value, and 3D Secure technology are the technologies used.
If you’re new to accepting credit cards, this article will walk you through how to get started with fraud prevention. Keep this information available as a reminder for staff training if you’re currently accepting cards.
1. Verification of Addresses
For online firms or enterprises that manually input credit cards, the Address Verification Service (AVS) is one of the most popular and effective anti-fraud solutions. Almost all credit card processors enable it, and it offers valuable information to aid in the detection of potential fraud.
How it works is as follows:
Address Verification checks the information on file with the credit card issuer with the name and address provided by the client. It uses a letter code to indicate if the data matches, does not match, or just partly matches. A street address, for example, may match but a zip code may not.
See the complete list of AVS letter codes.
What to do with it:
You may reject transactions manually or automatically using AVS. You may either manually examine the codes or create filters to automatically reject transactions if they are given a certain code.
For example, you may opt to reject any transaction that gets a code indicating that the customer’s street address or zip code do not match the information on file. If you have particular questions regarding how to set up AVS filters, contact your processor.
Why should you utilize it?
AVS is a necessary component for certain interchange categories, or the categories that determine your wholesale pricing for credit card processing, in addition to helping to prevent fraud. This implies that if you utilize AVS correctly, you may be able to save money on processing fees.
Additionally, if you get a chargeback, AVS may assist you. According to Visa’s merchant guide, companies who get a chargeback after approving a transaction that passed AVS with specific codes may be more protected than those that didn’t.
Cost:
The cost of using AVS varies per processor, with some opting to charge a modest fee for each AVS transaction. Fees typically run from 1 penny to 10 cents per usage, although your processor may charge you more or less.
Furthermore, MasterCard charges a modest cost to utilize AVS, which is not determined by your processor and cannot be changed. AVS costs $0.0075 per transaction for card-not-present (online) transactions and $0.005 per transaction for card-present transactions, according to MasterCard. AVS is free of charge with Visa.
Keep in mind that using AVS has a minimal cost and may save you a lot of money by possibly qualifying you for reduced interchange and avoiding expensive chargebacks or fraud.
2. Value of Card Verification/Code of Card Verification
The Card Verification Value (CVV) and Card Verification Code (CVC) are values that are used to validate the validity of a credit card. Businesses cannot keep the number since it is printed on the actual card.
How it works is as follows:
When making a transaction, the CVV is a number used to verify that the client has the actual credit card. Because illegal users often have just the card number, having the CVV helps filter out such transactions.
CVV/CVCs are three-digit numbers found on the back of Visa, MasterCard, and Discover cards near the signature area. CVVs are four numbers on the front of an American Express card that are distinct from the card number.
What to do with it:
You may activate a CVV field while accepting credit cards online or by hand-keying. You may reject transactions manually or automatically for a CVV mismatch, just as with AVS. If you need assistance setting up CVV authentication on your site or computer, contact your processor.
Why should you utilize it?
CVV is a fundamental line of defense. It helps guarantee that the purchaser has the actual credit card and is not just utilizing stolen credit card information when it is needed for online purchases. It may help you save money if you use it for an in-person keyed transaction.
Keyed transactions are usually regarded to be more risky and have a greater processing cost. Inputting the CVV at the point of sale helps to verify the transaction as genuine, potentially lowering expenses.
Costs:
Visa does not charge a cost for CVV, however MasterCard does charge a $0.0025 transaction fee when CVC is utilized. CVV/CVC does not typically result in extra costs from the processor, but check with yours.
3. Secure 3D (MasterCard SecureCode and Verified by Visa)
3D Secure is a fraud-prevention technology in which three parties are involved in the authentication process: you, your acquiring bank, and the credit card company.
It provides additional degree of protection in the event that an unauthorized person obtains the card and passes the CVV test. Customers will be required to provide a personal code at the time of checkout using 3D Secure, which unauthorized users will not know.
Verified by Visa and MasterCard SecureCode are the two 3D Secure solutions available. These two tools are only useful for ecommerce companies and cannot be utilized offline.
How it works is as follows:
When a client makes a purchase on your website, they will go through the normal checkout procedure and give their credit card information before being routed to a secure page to enter their 3D Secure passcode. The transaction will be able to proceed normally after successful authentication.
The extra step in the checkout process may be seen as a disadvantage by certain companies. Always think about how your actions will affect your consumers.
What to do with it:
To approve transactions, you’ll need to contact your credit card processing provider and, in most instances, install a plugin.
Why should you utilize it?
The United States is in the process of transitioning to chip credit cards, and it has been claimed that as a nation makes the move, online fraud rises.
The United States is still in the early stages of chip card acceptance, but as it becomes more difficult to conduct fraud in person, criminals will resort to the internet. Using all of the anti-fraud technologies available to you may help you and your customers stay safe.
If you utilize 3D Secure, you may be eligible for advantages from both Visa and MasterCard. Because SecureCode is regarded a high degree of identity verification, Visa claims that responsibility for fraud may transfer from you to the issuer; MasterCard claims that you’ll be better protected in chargebacks and customer disputes.
Costs:
Using 3D Secure technology does not incur any additional fees from Visa or MasterCard. You’ll have to cover the expenses of purchasing plugins or hiring a developer to apply the technology. Inquire with your processor about any extra 3D Secure costs.
Keep this information in mind whether you’re new to accepting credit cards or a seasoned company owner. It may serve as a useful reminder of what tools to ask your processor about or educate to your team if you transfer processors or train new employees.
Frequently Asked Questions
How can small business protect from fraud?
The best way to protect your business from fraud is by being proactive. Create a policy that clearly states what you will and wont do with the information you collect about your customers.
How can online businesses protect from fraud?
Online businesses can protect themselves from fraud by using anti-fraud software. This software will detect fraudulent transactions and block them before they are processed.
How can you protect against online fraud?
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