10 Tips to Reduce Card Not Present Fraud(CNP)
One of the most challenging tasks for businesses that are operating online is preventing fraud. Especially the Card Not Present fraud which pushes merchants into huge losses both in terms of money and business growth. Card Not Present fraud AKA CNP fraud occurs when customers complete their transactions in the absence of their credit card. Meaning either the customers nor their cards are not accessible to the merchant during their transaction. CNP transactions are generally made via phone, email, fax or online. As merchants and customers don’t meet face-to-face during the payment process, there are many risks associated with who is actually making the payment.
CNP fraud is a loss to both customers and merchants; the customers’ sensitive information is in the hands of strangers and merchants lose loyal customers or end up paying heavy chargebacks. Overall, merchants are at a huge loss as the chargeback disputes results are expensive. Also, the card-not-present transactions cost more due to the risks imposed in using them. Ye, it is solely because of the high risks they are exposed to. But the best part is that customers experience a flexible and convenient payment option while they are shopping, which is why CNP transactions are used by many merchants over the world despite the risks.
If you have experienced a CNP fraud, it doesn’t mean the fault is fully yours.
- Your customer might have lost the physical credit card somewhere and it might have gone into the wrong hands.
- Or your website might have vulnerable points that compromised your customer’s data to hackers.
However, you can’t control the first action and completely avoid CNP frauds. But you still can reduce the risks of CNP fraud by focusing on securing your website and protecting your customer data. No customer wants to visit a risky website and risk their important information, right? So, here are the 10 best ways to reduce the risk of CNP fraud.
Top 10 Tips to Minimize Card-Not-Present Fraud
Collect the Maximum Information
Fetch your customer’s information as much as possible to know them better. This not only helps you to market your business but also to prevent fraud. The information such as name, email address, phone number, billing address, login credentials, credit card information and IP address acts as their identity as they are not physically in front of you. So, anytime you notice a different phone number with your customer’s credit card information, you can stay alert and take actions to prevent the fraud.
Apart from the information that customers are sharing, you can even find more useful information by going a step further. Extract the extra information from the data you already had such as find out the country and region based on the phone number and IP address. So that you can compare them with the provided billing information when you notice any suspicious activities. Thus gather maximum information possible and be in a position to differentiate fraudsters from your customers.
Store Customer’s Data
To prevent your business from risks of card-not-present fraud, you will need to store each minor information of your customers in your database. This will act as evidence when you come across chargeback disputes or simply friendly frauds. Also, whenever you notice a bulk transaction or bulk order from suspicious users you can go back and check their actual information available with you. Hence you can decide whether that is a genuine order or a fraudulent transaction, thus keeping your business safe. Or else you might end up with a chargeback that may charge more than you imagine.
Implement Fraud Prevention Tools
As there are many risks with card-not-present transactions where you won’t be able to identify the right owner of the credit card information presented, you need to be more proactive in detecting the fraudsters. Though a fraudster stole the physical card or a criminal hacked the credit card information online, it becomes difficult for them to proceed further if there is an extra step where they need to confirm their identity. And fraud prevention tools can help you establish this extra step. Let us have a look at them.
Address Verification Service: This helps you compare the billing address submitted by the user at the time of issuing the card to the billing address submitted during the checkout. You can decline the order if those both don’t match.
Card Verification Codes: You can ask for CVV codes consisting of 3 or 4 digits based on the credit card types during the payment. Thus you can stop the fraudsters who do not have physical credit cards with them.
3D Secure Code: This lets credit card issuers ask their customers to set a secure password. During the transactions in eCommerce portals 3D secure code service requests a personal password to enter in order to complete the transaction. There are minimal chances that hackers can guess the password. Hence their transaction gets declined.
Verify the Order Details
It is always necessary to check order details every time you make a sale. Check billing information, shipping information, phone number, IP address, and email address of customers. If you find a different billing and shipping address then you might want to reconsider processing the transaction.
Spy on Unusual Actions
If there are any different bulk orders from a single credit card, that might be an issue you should consider. Else you may end in a huge loss. Also, monitor the sales activities online to detect any suspicious customer. Scenarios such as different shipping, billing and IP address of a single customer are definitely card-not-present fraud. So, beware and study your customer’s behavior before you accept the transaction.
Never Ignore Smaller Transactions
Not only bulk orders cost you great loss, but also numerous small orders can make your business unrecovered from losses. Fraudsters are growing smarter and doing unnoticeable transactions to avoid the risk of getting caught. So, keep an eye on small transactions too to protect your business from fraud.
Create Reports of Fraudulent Actions
Your experiences can teach you better. Create a report of fraudulent actions and suspicious behavior and share it with your team. So, next time if anyone on your team notices such activities, they can take action against those fraud attacks.
Recheck if your Payment Processor is Risk-Free
Protecting your own website with fraud management tools, and web pages with SSL certificates are highly important. But these are not enough to stop hackers from stealing your and your customer data. Even your payment processor needs to be solid with zero vulnerabilities. So, before you trust a payment processor, ensure if it is highly secured and protected.
Never hesitate to dispute chargebacks. Though these are called friendly fraud, the fault will totally be on the customer’s side. They claim that they are unaware of the transaction and report it to their credit card issuer and file a chargeback dispute, which leaves a negative impact on your merchant account. There are different reasons that customers file a chargeback, but it is your right to dispute when you have proper evidence of their order request, confirmation and transaction.
Confirm the Orders via Phone
To avoid the chargeback, it is highly recommended to confirm the order personally. Along with sending an invoice via email, first, confirm the order ringing them on their phone number, and record the conversations. This will act as strong evidence when disputing against chargeback.
Card-not-present transactions are risky and expensive but still, they help you boost your business by providing cashless and convenient payment options for the customers. After all, customer satisfaction is what your business needs to grow further. Also, the issue is all about compromising customer’s sensitive data and making them victims of minor loss which can be recovered. The major victims are going to be merchants if proper precautions are not taken. So, every business needs to take the right measures in order to protect their and their customer’s data. However, you need not worry much about the risks as there are many ways you can prevent frauds and protect your business from losses. Following the above tips you can reduce the risks of CNP fraud to almost zero.