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Reduce Fraudulent Activity On Your Merchant Account

Credit card fraud has been steadily on the rise as criminals develop even more inventive ways of stealing financial data for unauthorized purchases. The introduction of EMV credit cards is helping to reduce fraudulent activity within brick-and-mortar retail stores. However, in the online world, the security features that come with these chip-enabled cards offer only limited protection.

As a result, security experts predict that Web-based credit card fraud could exceed $6.5 billion by 2018.

Some payment processors offer fraud protection to help limit your liability. Though a far more cost-effective solution is to prevent credit card fraud from happening in the first place. Because even when fraudulent charges are reversed, you still pay a price in terms of:

  • Lost time
  • Extra paperwork
  • Diminished consumer confidence

These hidden costs are sometimes three times more than the dollar amount of whatever fraud took place.

Below are some best practices that your business can adopt to reduce the amount of fraud that occurs within your payment environment:

1. Basic Fraud Detection Steps

"Card not present" transactions are the norm in e-commerce. You simply have to trust that the true card-holder is authorizing each transaction. However, you can still ask for information that potential hackers might not have, including:

Address Verification

In addition to the 16-digit credit card number, you should also request a working address for each transaction. More specifically, you should verify the following:

  • Does the billing address match the contact information provided by the card-issuing bank?
  • Is the customer trying to use a different shipping address (if ordering physical items)?

Card Verification Value (CVV)

Most consumer credit cards come with a three or four-digit value that allows you to verify whether the card is truly present. Don’t authorize any transactions unless the customer can provide the correct CVV code.

2. Country-Specific Transactions

With more advanced payment processing solutions, you can use country-specific IP filters to block or accept certain transactions:

Geo IP Tracking

This option allows you to automatically reject transactions from whichever countries you choose. For example, you can eliminate all purchases made from France, Japan or Russia.

Card Issuing Country

With "card issuing country" filters, you have even greater control. This feature allows you to only accept a payment if the card was issued in countries that you specifically select. For example, your account only allows purchases made with French, Japanese or Canadian credit cards.

3. Advanced Fraud Detection Features

There are times when thieves do have the right address and CVV code, and using proxies, they can circumvent traditional IP-detection.

This is when you need to rely on more advanced security features:

Negative Database Security

Similar to spam detection, negative database security allows you to match each transaction against a list of high-risk card numbers and contact information.

Quotas and Thresholds

Set up your payment environment to only accept transactions above and below a certain amount. Anything outside of this range automatically gets rejected.

Unusual Buying Patterns

Limit the number of transactions that can take place within a certain time frame. With some "velocity" filters, you can even flag certain IP addresses and dollar amounts to gain more control.

Paused Transactions

Using a variety of filters, you can automatically put a hold on suspicious transactions. This is particularly useful for big-ticket items — especially when dealing with conveniently round numbers. Don't let these transactions go through until you've had a chance to contact the cardholder directly.

Looking for More Fraud Detection Tips?

At Tailored Transactions, we specialize in online payment security. With our advanced payment processing solutions, we can help you detect and prevent online fraud before it even happens.

Contact Us Today to learn more about our advanced payment security solutions.

Visit us online at or call us direct at (888) 669.1686