Ignite Payments
learning center

Ignite Payments
* Minimize risks involved with a Merchant Account

* The advent of the Internet has made credit card fraud easier to promulgate.

It is the merchant -and not the customer - who bears the brunt of such fraud. The absence of having a customer in front of you, face-to-face, is one obvious problem. But even with retail transactions, the swiping of the card and a resulting authorization merely means the card has not expired and has not been reported as stolen.

Though you cannot completely avoid such risks, with certain precautions you can definitely minimize them.

These frauds can lead to excessive chargeback rates and the bank in turn may close your merchant account.

Here we give you a quick checklist of what you should do to minimize but not eliminate your risk of being victimized by fraud.
  • Address Verification System (AVS) : Address Verification system or AVS is a very potent tool in stopping fraud. AVS compares a part of the billing address submitted by the customer with the records kept on file by the issuer of the credit card. The AVS service is offered for free by many merchant account providers; some however charge an additional fee. For example, it generally only works with U.S. issued cards, obviously a problem if you will be taking orders from outside the U.S. Second, fraud artists can often supply a valid address for the stolen card, if they also obtained the true cardholder's address when they took the card (e.g. from a stolen purse or wallet). They then provide a different address - one to which they have access - where they ask that you ship the product to. But despite these drawbacks, AVS is still very capable of stopping many attempts at credit card fraud.

  • Check the Order: Check, and recheck the order. If you are manually inputting orders, you should take the time to examine the data inputted by the customer to find any discrepancy in data. If you see anything suspicious, stop the transaction.

  • Non-Matching Addresses: If the shipping address and the credit card billing address do not match, it may be an indication of credit card fraud. You should consider telephoning the customer to enquire why the discrepancy exists.

  • Retail Sales: If you are selling face-to-face in a retail environment, always check the expiry date and see if the card is signed on the back. If it is, examine whether the signature matches the signature on the signed sales receipt. If you are still suspicious of potential credit card fraud, ask to see some photo I.D.

  • Online Orders: With first time customers of big-ticket items, ask the customer to send you, by fax, a copy of his driver's license and credit card.

  • Bulk Orders: Watch out for unusual sales; for example, sales of a large number of the the same product from the same credit card, which could be an indication that your customer plans to make a big hit off of you and then resell the goods.

  • Email Addresses: It is very easy to obtain free email addresses and the identity of the person owning the account is often impossible to ascertain. The customer can hide behind an untraceable email address from a free email service, if he has stolen the card and the owner's address. You can minimize this risk of credit card fraud by calling the customer to take the order over the phone.

  • Check Websites: Email addresses include, after the @ sign, the domain name of their website. Simply add www. before the domain name and check to see if the website is blank or under construction to find out if the customer has given wrong email address. Also, see that your order form collects the customer's IP address, which is an individual number assigned to each computer. With the IP number, you can locate the owner of the computer by doing an IP search.
Use the above-mentioned checklist and closely scrutinize every transaction. You will be way ahead in minimizing risks with your merchant account credit card transactions.