Card-not-present transaction to cost Retailers over 100 Billion

Over the last couple of decades, the use of credit cards is increasing rapidly and consequences lead to the online transaction through e-commerce. Transactions through credit cards are done in two ways; using the cards in POS or using the card information in online payment gateways.

The credit card fraudulent activities may conduct in both ways; card present fraud and card not present fraud. Usually, the loss of card present fraud bear by the card issuer and on the other hand the loss of card-not-present fraud goes to the merchants.

In both cases, there are significant security measures taken by the card issuers and also the payment gateways, but the fraudsters are continuously making their way out of those. Whenever the e-commerce is growing rapidly, as a result, the rate of a card-not-present transaction is rising several times and the fraudulent activities are occurring through online phishing. Recently a Research published the report that within 2018 to 2023 the retailers are going to lose almost around 130 Billion dollars due to card-not-present transactions. The assumption is really alarming whereas the impact will lead so many retailers to the winding up.

How card-not-present fraud occurs:

The process starts from getting the information of the card and the cardholders. Here are some ways which have been observed over the years:

• It’s simple to get the card information whenever the cardholder uses that for any transaction at POS. The cashier or the assistant (even the person next to you) can note down or memorize the details for a while avoiding the attention of the cardholder.
• Another way is through online phishing in which process fraudsters send email to the cardholder pretending any official identity and asked for the personal information. Unfortunately, in most of the cases, the user responds with the information.
• Besides, the information of cardholder also remains available in the black market where the hackers collect information from the servers of different merchants and handed over to the fraudsters.

Whatever the way of getting the information the criminals use those to purchase from a merchant as much as they can on a single day before getting exposed.

How retailers count loses for card-not-present fraud:

It has been said previously that the liability of card-not-present fraud goes to the retailers as per policy. Here retailers lie between the below risk factors:

• If the criminals use the stolen card information to purchase then the retailers are bound to refund the amount.
• Sometimes it has been found that the cardholder own get involved in fraudulent activity and uses different mailing addresses for the shipment. After receiving the products the cardholder claims to the bank that he did not authorize the transaction. In this case, the retailers have to count more losses refunding the transaction amount, counting the loss of products already delivered and shipment cost.

How to prevent the card-not-present fraud:

Fraud prevention measures must be taken immediately to reduce the risk of transaction fraud. But along with the retailers’ fraud prevention measures, the fraudsters are also remaining very active to breach the security. To save the billions of dollars the security approach must be ironic strong which is impossible to breach. Experts are considering the biometric authentication for the card-not-present transaction which is the most reliable security system and significantly unique to spoof. Among the different modalities of the biometric identification, there are several ways which are almost impossible to breach. Already financial institutes and payment gateways have initiated the biometric authentication for credit cards and the rapid implementation is being chased by the time.