Card Solutions Int'l offers an Internet Gateway with FREE Fraud Controls Available

Many people ask "why is credit card processing over the internet, over the phone or by mail such a high risk venture"?

Well, just think about it...you take a credit card order over the internet or by phone for $200.00, process it in the normal fashion, then 60-90 days later your customer calls his credit card issuing bank and states that he never ordered anything from your company and now wants a credit issued for that "erroneous" charge. You don't have his signature and can't prove whether or not he received the product or service. It's your word against his.

His bank then issues him his refund for the $200.00 sale and charges your merchant bank account for $200.00 (plus chargeback fees). You only have $125.00 in your checking account so that $200.00 charge comes back to the processor marked "NSF-Insufficient Funds”. Now, who is going to pay for that disputed charge? The processor who set up your merchant account has to pay! They will make every effort to get the money back from you, the merchant. This is why the processors consider these types of accounts to be "high risk", and "high liability"!!

If over 3% of your monthly charges are disputed for over 2 consecutive months, your merchant credit card processing account may be subject to termination and it may be possible that these poor percentages may cause derogatory information to be posted to your personal credit report through the national credit reporting agencies! Unfortunately, the rules are not written to favor the merchant.

There has been much discussion in the media about the impact of Internet and MO/TO credit card fraud from a consumer perspective. This is somewhat surprising really as the incidence of fraud perpetrated by online merchants against consumers is fairly rare and consumers are typically only liable for the first $50 of any fraudulent transaction, and even this liability is often waived by the credit card issuers.

In fact it is usually the merchant who is the true victim of Internet credit card fraud. This is because Internet credit card transactions fall under the heading of MOTO (Mail Order / Telephone Order) transactions, also called CNP (cardholder not present transactions). Most credit card merchant account agreements leave the merchant 100% liable for fraud committed via this type of transaction as well as requiring them to pay a $15-$25 chargeback fee. And as if to rub salt in to the wound, if a merchant experiences a high level of chargebacks they are often hit with an increase in the discount rate they have to pay on each transaction or may even have their account terminated. And once lost, a merchant account can be almost impossible to obtain again

Card-not-present (CNP) merchants must take extra precaution against fraud exposure and associated losses. 

Follow these recommendations to help prevent fraud in your card-not-present transactions:

1.  Always obtain an authorization as soon as possible; at time of delivery, immediately when the Internet sales come in, as soon as the product/services are ready for shipment/delivery.

2.  Verify the card’s legitimacy:

            A.  Ask for the card’s expiration date and include it in your authorization request.  An invalid or missing expiration date might indicate that the customer does not have the actual card in hand.

            B.  Use all fraud prevention tools such as Address Verification Service (AVS) and the Card Verification Value (CVV) to verify the user truly is the cardholder. 

3.  If you receive an authorization, but still suspect fraud:

            A.  Ask for additional information during the transaction (eg. A faxed copy of a utility bill with the cardholder’s address on it, a faxed signed Payment Authorization Form, a faxed copy of the front and back of the credit card used).

            B.  Contact the cardholder directly with any questions.

            C.  Confirm the order separately by sending a note via the customer’s billing address rather than the “ship to” address.

            D.  Whenever possible, obtain the signature of the cardholder on a Visa/MasterCard sales slip to authenticate all sales in case of an inquiry. 

So it is therefore vital for merchants to put in place fraud prevention processes now and not wait until a fraud attempt occurs.

Card Solutions Int'l has helped merchants protect themselves from credit card fraud for the past twelve (12) years.  Our staff is available to answer any questions and/or concerns about Card-Not-Present transactions.  Call us today for a free quote and education on credit card processing.

800-530-2440, info@cardsolutions.us, 561-721-1900