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Ways to combat credit card fraud

If you accept payment via Credit Card on your website (whether it’s a simple “pay your bill” form, or a full eCommerce “shop”), there are several things you can do to reduce credit card fraud.

Firstly, lets look at what happens when a credit card is “authorised”.   When you receive a credit card authorisation, all this does is confirm

  1. The card is valid
  2. The card has enough funds.
  3. The card hasn’t been reported as stolen.

This does not guarantee your payment!   

Things you can do as a merchant

As a merchant when you receive a credit card order, it is important that you do some due diligence. 

Be wary of orders that:

  1. contain “high value” items.
  2. contain things that can be easily sold (e.g if you are selling “Retail” style goods).
  3. have a different billing / shipping address.
  4. has comments attached such as “I need this asap” or “please expedite order”.
  5. goes overseas.
  6. has had multiple attempts of card authorisation.
  7. coming from “free” email accounts (such as gmail).

In addition, when shipping your goods (and if possible / realistic) try to use a courier that has a “must show ID” on delivery.   Note a lot of couriers, will leave a card “collect from depot” if a customer is not home.  Sometimes ID is not required to collect from the depot.

Payment Gateways

Payment Gateways such as Stripe  or eWay, have fraud prevention techniques as well as customised rules that can be setup.   

You may impose stronger rules on orders over a certain amount, or orders from a certain country.

Things you can build into your website

  1. On your actual website, you can include things such as SMS validation (before an order is placed, an SMS code is sent to the customers mobile, which they must enter).
  2. Limit the number of times an order can be attempted to be paid for.
  3. Set a max qty that can be ordered for particular items

In summary credit card fraud is something all merchants will experience at some point.  However putting into place strategies to combat this, will reduce these levels of your exposure.