Understanding Online Card Fraud and How To Safeguard Your Business

Understanding Online Card Fraud and How To Safeguard Your Business

On 18 August 2021

With the world shifting to online payments, fraud cases have also proportionally increased. Card fraud is described as the theft of funds, products or services involving the use of credit or debit cards.

Business owners who sell or transact online usually bear the brunt of card fraud. This is often the case when it's a ‘Card-Not-resent’(CNP) transaction as it’s much harder to verify the identity of the person using the card. This is contradictory to the main aim of running a business which is to make sales without losing money in the pipeline. 

With this said, only a small percentage of card transactions are fraudulent. But they can still cost millions in losses for business owners and card owners. 

The most common types of fraud include:

  1. Card Theft Scams - This occurs when professional fraudsters steal cards or card information and try to use it to buy products. They will then either be the consumers or resellers of the products to unsuspecting buyers. They may also claim to have canceled a service e.g a holiday booking and ask for a refund for the amount paid by the genuine cardholder. 
  2. Friendly Fraud - This occurs when a client makes a payment to a business and then consumes the product or service. Once this is done, they then issue a charge-back claiming not to have received the product or service or claim that their card was used fraudulently. While this mostly occurs online, there are instances where cardholders will try to initiate charge-backs for card-present transactions.

4 Ways To Prevent Online Frauds In Business

  1. Looking out for suspicious email addresses - If the email used contains too many characters or mismatched letters e.g [email protected], ask for the customer to send verification details. This is easier to do for smaller e-commerce sites where the orders can be manually checked.
  2. Require a Security Code for all Cards - Most online card payment processes require consumers to input the CVV number. Depending on the card issuer, the consumer may also be asked to provide a One Time Password - OTP
  3. Assign tracking numbers to orders and require signatures at delivery - This ensures you can track the transaction from when it was initiated to when the customer acknowledges receipt of the item. 
  4. When in doubt, ask for verification - Trust your gut. If you are suspicious, ask for the customer to provide proof of identification as well as a photo of the card showing the last 4 digits only. 

How Pesapal Safeguards Online Businesses Against Fraud

At Pesapal we go the extra mile to protect your business from fraudulent card activity. Having PCI DSS certification, we employ world-class measures to safeguard your money. 

Additionally, we provide the following for businesses that process payments through our platform:

  1. Have a state of the art fraud management system that is able to block suspicious transactions
  2. Manually check suspicious  transactions by our experienced staff
  3. Risk profile our merchants to ensure that they do not suffer added fraud attacks.
  4. Inform merchants when a transaction is suspicious so they can ask for verification


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Published In: How To's,Payments

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