Credit Card Fraud: Essential Tools You Can Use To Protect Your Business From Credit Card Fraud

The eCommerce economy has gone and is estimated to reach $1.06 Trillion in 2022. Consumers who prefer convenience and are tech-savvy will continue to prefer buying and paying for things online for the next few years.

As more people take advantage of the convenience and ease of purchasing online using their debit and credit cards, these trends are expected to continue. Unfortunately, as the usage of debit and credit cards has grown, so has the potential for fraud for customers, merchants, banks, and card networks.

If you run a healthcare eCommerce store, you know how important it is to maintain your online store safe from fraud and scams. Vigilant digital security is more crucial than ever to secure your business and consumers. After the pandemic, attempts at fraudulent purchases soared by 69% in 2021 alone.

However, there isn’t a one-size-fits-all strategy for protecting your company from such threats. As a merchant, you have alternatives and actions to limit the threat of fraud and scam assaults against your company. To ensure protection, you must adopt a range of measures. 

With that said, this guide outlines tools you can arm yourself as a merchant to protect your business from credit card fraud.

Tokenization

The most common fraudulent transactions involve online purchases, sometimes known as “card-not-present” (CNP) transactions. These are transactions in which neither the card/cardholder is present, such as those made using a desktop or mobile device. For fraudsters, the benefit is that such transactions usually do not require a PIN. On the other hand, a variety of strategies may be able to stop them in their tracks, and of them is tokenization.

Tokenization substitutes randomly generated numbers for credit card numbers, making it hard to track back to the original data or information. You can use a token to process payments without revealing a customer’s account number. 

Tokenization begins when a customer gives a business their payment information, such as their main account number (PAN), security code, etc. The company then asks the network for a payment token. The token information is shared with the user’s bank, allowing the consumer to utilize the token.

EMV technology

Most, but not all, companies are obliged to have an EMV chip reader. For example, even though gas stations are obliged to have them inside, they have been able to put off the necessity for their gas station pump card readers for years. So, even if your sector doesn’t require it, protect your company from credit card theft by getting one.

In the 1990s, Europay, Mastercard, and Visa created a security standard currently used by American Express, Discover, JCB, and China UnionPay. EMV chip cards have become a global security standard due to their efforts.

EMV card readers read the chips within the cards, and you may either put the card into the reader or tap it on top of the reader (called “tapping”). People used to swipe the magnetic stripes on the cards before EMV, but they no longer do it for debit cards, but they still do it for credit cards.

While EMV cards are more challenging to use in person, they aren’t safe since a thief may fake a signature or sign the back of a blank card, thereby making it “their” signature.

One of the benefits of using an EMV chip card reader is that it adheres to the European security standard known as Strong Customer Authentication (SCA).

CVV2 codes

By not using CVV2 codes in their purchases, many online retailers put their customers’ information in danger (the 3-digit code on the back of your credit card).

The code is an extra layer of protection that stops retailers from stealing credit card details from data breaches or cyberattacks.

The cons are thwarted on websites that demand a CVV2 code since most businesses don’t maintain these static CVV2 numbers on their servers or retain them in a separate database.

That’s why CVV2 codes shouldn’t be stored! If a thief obtains those numbers, it negates many of the security measures implemented by other firms to prevent credit card theft.

Encryption

Encryption secures transactions by utilizing mathematical techniques to “transcribe” payment information. Certain best practices are followed by card networks, such as ensuring that “cleartext” cardholder data is only available at the moment of encryption and decryption. Additionally, only ANSI X9 or ISO-certified encryption techniques must be used to encrypt all cardholder data and sensitive authentication data. The data before it is encrypted is called “cleartext” in encryption. “Ciphertext” refers to the encrypted code.

Strong customer authentication (SCA)

Strong Customer Authentication (SCA) is being used by some payment service providers in the United States, and if you can find one that does, grasp it with both hands.

The EMV readers follow even the basic concepts of Strong Customer Authentication. Merchants must utilize two of three components to authenticate a credit card purchase under SCA. The buyer must demonstrate what they have, what they know, and who they are. For instance:

  • if you have a smartphone or a debit card
  • Something you know denotes that you are familiar with your password or PIN
  • Your biometrics, such as your fingerprint or face recognition

Merchants and entrepreneurs that accept physical credit cards at a physical location are protected by the SCA standard and the EMV chip card reader. However, it does not address the issue of card-not-present (CNP) fraud.

CNP transactions are processed by anyone who sells online. Because it’s one of the most common transactions, it’s also one of the most prone to credit card fraud. However, you may take steps to safeguard your company during CNP transactions.

Consumer transaction alerts

Consumer transaction alerts are a simple and effective method of detecting fraud. They are a quick indicator that a transaction has begun and are sent to the cardholder’s phone, email address, or mobile banking app. Consumer preferences can be reflected in alerts, such as only being sent when a transaction matches particular conditions.