Card Not Present (CNP) fraud is a threat to any business that depends on online transactions. The most vulnerable, and hardest hit by such losses, are freelancers and so-called solopreneurs who often have tighter margins to manage.
This type of card fraud is growing steadily worldwide, and in the US alone it is predicted to reach $6.4 bn by 2018. So how can individual traders protect their businesses and their balance sheets? How can they negotiate the risks of accepting and processing online payments and invoices?
Payment processors offer one method of protection. As well as helping to manage your online transactions and accept payments, a processor can provide a range of fraud protection services and tools. Below are some of the main points to bear in mind when choosing a payment processor and minimising your risk of fraud.
In today’s economy it is important for businesses to accept online payments, and it is equally important to choose a platform that can protect your business from fraud. It makes good business sense to have the versatility to support mobile payments and accept ACH, debit cards, credit cards and other payment methods, but you have to be confident that the payments platform is right for you, and be fully aware of how it works.
If a payment processor supports similar businesses to yours, it will understand your risks and fraud management needs. Ideally, it will talk to you about best practices and common pitfalls, and will present options for your business that you may not have considered.
You need a partner as well as processor: one with the experience and knowledge to ensure that nothing is overlooked, who is up-to-date on fraud risks, and has the appropriate tools to protect you.
You need to stay informed and know the industry language. When you have chosen your processing partner, you must familiarise yourself with financial and industry terms such as tokenisation, chargebacks, PCI compliance, and PSD2. The more you know, the better prepared you will be to trade online. Like learning the Highway Code when you begin driving, this knowledge will help you to stay safe and focused.
Make sure your processor is keeping you informed about current and emerging risks, as well as the third-party tools that are available to you. And don’t forget to ask your processor which tools they can provide you with – for a cost or even for free – and ensure they advise you on any new or existing service that will help to protect your particular business.
The fewer the entry points in a processor, the less vulnerable the system will be to attack. So choose a provider with integrated tools and services, where everything is under one roof to reduce the risk of fraud from multiple entry points. And if you can select a provider that goes a step further and has in-house tokenisation tools, so much the better. In-house tokenisation encrypts credit card details so that the stored information can’t be used fraudulently, and also makes it easier for returning customers to pay quickly.
Selecting a payment processor is more than simply choosing a company to connect your business to banks and credit card networks. It’s a line of defence as well as a business channel. You must choose a processor that prioritises fraud and risk management requirements – your fraud and risk management requirements – and will enable your business to grow in a safe environment.