Payment Security For Merchants

by | Feb 28, 2020 | Blog

As an online merchant, it is incumbent upon you to understand your responsibilities to protect yourself from cybercriminals. You need to ensure that you provide the best payment security and that your customers don’t have to worry about their data.

It’s your responsibility to secure the purchasing process and reduce the risk of fraud at every step of checkout. Data thieves’ knowledge of new technologies means that reducing the vulnerable points of payment processing is a crucial part of every eCommerce business.

SSL Protocol

You need to ensure that your website is secure by using SSL protocol to encrypt information on your site. SSL certificates show that your website is protected, which can help improve your online reputation. All information, such as credit card details and other sensitive data is protected. It also improves brand awareness and builds credibility with customers. The SSL is symbolized by a padlock icon in the URL bar and the web address begins with https.

PCI Compliance

Payment Card Industry Data Security Standards (PCI DSS) tell merchants how sensitive data used in payments should be secured. It requires data encryption to provide payments without using real card data that’s visible while processing. Note that PCI guidelines also consider tokenization in the future version.

Businesses rely on trust and PCI compliance helps to improve security and show customers that you are trustworthy. You need to do everything to decrease the risk of payment and data fraud that could damage your brand’s reputation.

Tokenization

Tokenization, a random string of characters that replaces sensitive information, such as a 16-digit credit card number, makes it easier to improve payment security and provide a payment process without vulnerabilities. Tokenization makes customer authentication during the purchase possible without affecting the transaction’s security.

The payment process involves sensitive data, so merchants need to secure systems where vulnerabilities exist. With tokenization, the chances of a data breach are reduced. Even if a token number is stolen, it is meaningless to fraudsters.

3D Secure

3D Secure helps prevent fraud in online credit and debit card transactions. It gives extra protection to transactions. 3D Secure creates a secure password for the shopper’s credit card. Every transaction is then verified with the password, which adds an additional layer of security. It can decrease the number of fraudulent transactions and boost your revenue.

Address Verification Service

You can also use an Address Verification Service, which requires customers to provide the billing address associated with their credit card. When the address on the card matches with the one in bank’s documents, the transaction will be accepted.

Many companies have a problem determining the location and storage of their payment data, but 42% of companies claim that payment data is at the greatest risk when it is stored. A Global Study on the State of Payment Data Security shows that more than 50% of organizations had a breach involving payment data within the past two years.

How to prevent fraud

Merchants need to comply with the payment, security, and risk standards of the countries they operate in.

Payment fraud, meaning any false or illegal transaction, is now one of the biggest problems for online business owners. It has also become a challenge for companies that offer financial services. Fraud in the eCommerce world could happen anytime and anywhere, making it hard to eliminate. Fraud is costly and affects your credibility with customers.

However, it’s impossible to avoid fraud. ECommerce and mobile commerce sites are getting more secure, and fraudsters are keeping pace. Fraudulent activities include unauthorized transactions, fake requests for a refund, using a service without paying the due amount, etc

Even though the technology is developing rapidly, it’s still impossible to completely prevent fraud. There are warning signs that you can look out for to limit the number of fraudulent activities.

  • Monitor your orders before shipping them.
  • Watch international orders closely as well.
  • Require a signature upon delivery to ensure that the order is delivered.
  • Pay attention to order times.

Even if you provide security for payments, fraudulent transactions can still occur. You need to understand your responsibilities to customers and your jurisdiction.

Chargebacks

Chargebacks occur when customers dispute a charge on their bill. The reasons for chargebacks include accidentally charging an account twice or the transaction charge was for a different amount then displayed on the site. Chargebacks also happen when the ordered product isn’t delivered or a customer is not satisfied with the item or service. In most cases, it’s related to stolen credit card data.

When the cardholder requests a chargeback, the issuing bank begins the procedure. They contact the acquiring bank which tells the merchant about the chargeback request.

Chargebacks are always costly for merchants, and if the bank claims that a customer is right, the merchant will lose the sale and have to pay the chargeback fee. You can limit the number of chargebacks, but it’s impossible to eliminate them completely. One of the most important things to do is to update your website and fix errors regularly.

Minimize payment risk?

Payment risk means loss due to some “payment events”. Many companies, especially ones that handle high-volume payments, have strategised management risk plans to avoid difficulties and harsh consequences. Every payment method involves risk and these could be fraud or operational risk (when the financial loss is due to human or technical errors).

It’s important to monitor your payments to predict the possibility of the risk, however, wrong decisions can be costly. Sometimes it’s better to let a specialized company manage the payment risk on your behalf. Choosing a payment gateway with fraud prevention tools to manage the risk is a good option.

Knowing the risk helps you to reduce the likelihood it will occur. You need to consider what the potential threats are, how quickly it can be detected, and how much it could cost.

Taking the following precautions can help to keep your payments safe and minimize the number of chargebacks.

  • Verify customers with the card-issuing bank.
  • Use payer authentication.
  • Provide updated product or service descriptions.
  • Make sure your payment descriptor reflects the brand that the customer is buying from (it could be your store’s name for instance).
  • Include your phone number on the descriptor. There is more possibility that the customer will call you first before contacting the bank.
  • Send confirmation emails to customers with all transaction details and keep them informed of the transaction status.
  • Provide shipping details with tracking information.
  • Make the refund policy clear.
  • Keep all information regarding past fraudulent activities to recognize which transaction might be considered risky.
  • Analyze trends.
  • React instantly.

Suspicious activities can damage your company’s reputation and could cost you much more than just money. All payment methods involve risk, but it’s your responsibility to manage the payment risk to avoid fraudulent situations.