As we think about credit card transactions, common concepts like fraud or theft come into our minds. Through data breaches or even purchasing items online with the stolen credit card number, there are several ways cyber criminals can alter the use of your credit cards. Moreover, credit card fraudsters are increasingly looking for new ways to play with the latest security protection of your business.
As more businesses continue selling their products or services online while receiving payments online at the same time, there is a greater potential for cyber fraud taking place. As a business owner, you are expected to be cautious explicitly when the credit card is not present in the given transaction -especially with orders made through email, phone, or online.
How can Businesses Prevent Credit Card Fraud?
For businesses, maintaining credit cards has become a necessity. Therefore, it is immensely crucial for business owners to protect their businesses from prospective credit card frauds that are quite common. Most businesses -especially small-scale organizations, do not give ample consideration to credit and debit card frauds. However, the absence of proper anti-fraud tools or methods can make them commit costly mistakes. Therefore, it is imperative for them to get an understanding of the best anti-fraud methods or tools useful towards protecting their businesses from credit card frauds.
Cash might continue serving as the king. However, since the advent of the global pandemic, the world is increasingly shifting towards the concept of electronic payments. In most cases, e-payments usually require the involvement of both debit and credit cards. The trend of using either debit card or credit card for online transactions is only going to increase in the coming times as consumers wish to leverage the benefits of ease of shopping online and the overall convenience.
Prevention of Card-related Fraud for Businesses
Card issuers and financial institutions across the world continue adopting an in-depth approach towards improved security that is capable of tackling frauds across all possible fronts. The first step to maximizing card-related security is de-valuing sensitive information to ensure that it becomes less significant when it accidentally falls into the wrong hands. For instance, you can consider tokenization -capable of converting credit card numbers into values or tokens that are randomly generated.
A token refers to a unique entity or number related to a particular transaction while having no use beyond the specific transaction. Eventually, the cybercriminal will realize that the token data that has been received is of no use.
Secondly, there is an ever-rising reliance on data analytics with the motive of identifying unusual patterns. Another instance can be pushing businesses in the respective payment system towards observing specific industry protocols -like PCI or Payment Card Industry standards and the overall protection of data. Finally, businesses can also consider alerting its users to the potential dangers of credit card frauds while motivating them to leverage the best security practices like monitoring the respective accounts on a regular basis.
What are the Best Anti-fraud Tools for Businesses?
Some of the effective ways and tools used for combating frauds for businesses are:
Remote Payments and E-commerce Payments Fraud Prevention
Tools linked with e-commerce payments and remote payments can include consumer alerts, credit card tokenization, dynamic passcodes, credit card authentication, and so more.
Fraudulent transactions linked with online payments made through debit cards or credit cards or even CNP (Card Not Present) are the most prevalent. These are specified transactions wherein neither the cardholder nor the card is present. This type of card fraud can take place when someone will be making a purchase through a mobile device or desktop. In this case, the benefit for the cybercriminal is that these transactions usually do not require a PIN.
Tokenization in Card-based Transactions
The concept of tokenization helps in replacing cred card numbers with some numbers or tokens that are randomly generated. These randomly-generated tokens are almost impossible to obtain the original information or data. A token enables you to ensure the processing of payments without exposing the account number of the consumer.
Tokenization takes place when the consumer will be submitting the respective payment details -including security code, PAN (Primary Account Number), and so more to the business. Then, the business will request a payment token from the involved network. The network is responsible for sharing token information with the bank of the consumers -allowing the consumers to make use of the token.
Alerts on Consumer Transaction
Alerts related to consumer transactions serve like closing the door after you have entered. These serve to be an effective tool or way to identify fraudulent activities. Alerts are typically sent to the email address, mobile-based banking app, or contact number of the consumer. They server as the immediate indication that a particular transaction has taken place. Alerts can be customized to reflect the respective preferences of consumers -getting issued only when the transaction is meeting specific criteria.
In contrast to alerts on consumer transactions, dynamic passcode is capable of preempting frauds. It is because these are used for approving a particular transaction. A dynamic passcode serves to be a one-time unique code that is required for verifying a particular transaction. It is sent to the banking app or mobile text of the consumer.
Credit Card & Debit Card Authentication
Most debit or credit card network providers offer access to extra layers of password security, intelligence, and analytics towards protecting e-commerce transactions. For instance, with the help of MasterCard SecureCode and Verified by Visa, the issuing bank is capable of analyzing as well as risk-scoring purchases. The brands continue following up with their own in-depth scrutiny while also risk-scoring all transactions as they are processed.
Such measures can offer comprehensive intelligence for businesses as well as financial institutions. Transactions that are potentially fraudulent can be subjected to extra security buffers. Cardholders are also asked to enter a specific password or sent a text message along with a one-time dynamic passcode towards verifying a transaction.
Encryption in Card-based Transactions
Encryption helps in protecting transactions by transcribing information related to the payment with the help of mathematical algorithms. Card networks are known to follow specific best practices -like ensuring that clear-text cardholder data will be available only at the encryption point and at the decryption point.
Moreover, all sensitive authentication information and cardholder data must be encrypted with the help of ISO or ANSI X9 approved encryption-based algorithms. In the concept of encryption, ‘clear-text’ is referred to as the data before the process of encryption. The text that has been encrypted is referred to as the ‘cipher-text.’
Identification of Devices
Another effective method of detecting and preventing credit card frauds is by checking the device’s unique ID. The devices could be desktops, mobile phones, or laptops. The method works on the concept that the consumer will be typically using a specific device.
The approach of device identification features two categories -persistent and specific. A specific device identification is capable of uniquely identifying a single device and not any other device. On the other hand, a persistent device identification is the one that will not change even when the settings of the particular device change.
Specific IDs are usually established with the help of cookies. On the other hand, persistent IDs depend on particular characteristics -like version number, operating system name, browser language, and browser name as observed on the first contact of the consumer. Both types of device identification methods have specific pros & cons. Even with their specificity, cookies can be easily removed for unsavory and legitimate purposes. It is observed that persistent IDs tend to be more durable while lacking specificity.
A crucial part of device identification is the location. It is usually determined by the respective ID addresses. Still, there can be some difficulties. IP addresses are able to change due to legitimate reasons -the route data will take as it has been routed with the help of mobile phone towers.
Counterfeiting Frauds While Using Debit or Credit Cards
- EMV Technology: EMV stands for Europay, Mastercard, Visa. It is regarded as the global standard for cards that are equipped with computer-based chips along with the technology for authenticating chip-card transactions. The presence of the EMV chip helps in preventing counterfeit frauds with the help of dynamic data. The chip is capable of generating the one-time use code for making every transaction unique. As the chip will generate a new number for every type of transaction, gathering the right number is not possible.
- AVS or Address Verification Service: AVS is regarded as one of the most commonly used tools for fraud prevention in the form of CNP (Card Not Present) transactions. The AVS check is helpful in comparing the billing address utilized in the transactions with the address information of the issuing bank for the cardholder.
Businesses can make use of important tools or methods to prevent common frauds related to debit or credit card transactions. By doing so it helps consumers ensure maximum trust in your business or organization.