Payment card fraud is on the rise around the world and nearly all of the increase is in card not present channels. Just as issuers are migrating to the chip & pin technology and increased online spending, fraud is on the move going from offline to online.
Card not present (CNP) fraud includes telephone, internet and mail order transactions where the cardholder does not phsically present the card to the merchant. It is primarily the unauthorized, illegal use of your cards to obtain goods without paying for them.
Card not present fraud, which includes card transactions made online, in the U.S. is expected to be nearly four times greater than point of sale card fraud by 2018, according to Javelin Strategy & Research. As a result, ecommerce merchants who lack a clear understanding about the risks of online card acceptance could face increased fraud losses.In general, cardholders have up to 120 days to dispute a fraudulent charge. However, most online merchants process online orders within one to two business days. Before the real cardholder has a chance to notice the fraudulent transaction, the merchandise has already left the warehouse.
Most card not present fraud involves the use of card details that have been obtained through skimming, hacking, e-mail phishing campaigns, telephone solicitations or other methods. The card details are then used to faciliate fraudulent transactions. If you’re a business that accepts card transactions you want to ensure that your customer data is protected and by virtue of which, that your company’s brand is protected. In addition to which it’s important to know what is the best way for your company to meet the latest credit card processing security standards (Payment Card Industry Data Security Standards).
According to the results of the 2015 Global Fraud Survey, card not present fraud is becoming “cleaner”. Clean fraud refers to fraudulent orders that look legitimate due to the fraudster’s ability to provide complete and accurate personal data. Merchants can more effectively fight fraud in the ecommerce channel by understanding the most common types of losses. By researching, implementing and enforcing security measures for all their card payment options, online merchants can more easily control losses associated with card payments.
Card not present fraud is part of online sales. If merchants are experiencing zero fraud, the chances are they are losing sales at the same time. To get the best out of the fight against fraud, merchants need to shift from a risk-averse, threat-detection policy to a strategy that focuses on business growth while risks are well managed.
