Fraud Protection

By Brian Van Ness

Identity theft is one of the fastest growing crimes today. As technology has become more readily available, so has personal information. The ease of doing transactions over the Internet using credit cards has become commonplace. Thieves enjoy the confidentiality the internet offers, and so credit card fraud is a temping target. Anyone using false or stolen credit card information in exchange for goods or services is committing credit card fraud.

Credit card fraud over the Internet is about twelve times higher then that credit card fraud committed at retail stores. As a result, merchant accounts dependant solely on credit card Internet business will typically pay a higher discount rate. This risk has forced credit card processing companies to create some anti-fraud devices.

Address verification is a service in which the billing address of the cardholder is verified before the transaction is completed. Along with address verification, credit card companies have included a three to four digit code that the customer must input before the transaction is complete. Every credit card company has a different name for this code. For example: CVV2 (Visa), CVC2 (MasterCard), CID (American Express), CID (Discover), etc. Statistics show that thieves frequently have just the credit card number- not the plastic credit card-and so don't have access to the code stamped on the surface. This code has decreased the number of fraudulent transactions that occur over the Internet, but it isn't foolproof.

In addition to the address and code verification, credit card companies use several other techniques to prevent credit card fraud. They also verify the cardholder's age and identity. This they perform these verifications in real time, before the customer gets a confirmation number for their purchase. Real time processing means that the merchant provider automatically validates the information, processes the payment, and sends a receipt to the business owner and the customer.

One other type of fraud protection is called the secure socket layer (SSL). The secure socket layer is used to protect credit card data from computer hackers or anyone else trawling for personal information. The SSL uses a 128-bit encryption method to safely and securely move credit card information from one location to the next.

Overall, Internet credit card transactions are quite safe. Promising new security methods are being developed every day. As a merchant dependant on internet credit card business, however, be aware that there will always be a few scoundrels who learn how to cheat the system. Fraud is an element that you must defend against but also plan ahead for. In your search for a merchant account provider, ask questions about fraud protection.

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