The use of credit cards in the US and worldwide has grown dramatically in the last 20 years. Part of this is the advance in payment technology, as it has become easier and faster to pay with a credit card. Thus, where 20 years ago cards were mostly used for unique and large payments, today you can use your credit card to pay for your milk at the supermarket and no one will raise an eyebrow. As more and more credit card payments are being made, a particular kind of transaction has also risen drastically. We’re talking about CNP or Card Not Present payment transactions. To put it simply, a Card Not Present payment transaction is any transaction where you and the merchant you’re paying are not both physically present at the same time.
This means all of your online purchases, any time you buy something over the phone, and even your recurring Netflix subscription.
With the rise of wireless internet, smartphones, and e-commerce, Card Not Present transaction have grown to represent 27% of ALL credit card payment gateway in the US as of 2019. And if you’re about to start a business, or even if you already have one, chances are that you need to consider how you can process card not present transactions as well.
What is a card-not-present (CNP) transaction?
The biggest issue with Card Not Present transactions is the heightened risk of fraud. In fact, the majority of credit card fraud involves Card Not Present transactions.
If a transaction gets report as fraudulent, the issuing bank can claim a chargeback for the credit card user.
This is great for protecting consumers, but as a business owner it means that you’re just as likely to suffer as a victim of credit card fraud, because the associated loss moves to you instead of the person whose credit card has been defrauded.
How Do I Protect My Business From Fraudulent Card Not Present Transactions?
If you’re in a business where card not present transactions are common, e.g. if you run an online store, then there is a couple of things that you can do to prevent fraudulent transactions from happening.
First of all, you can start requiring the customer to enter the CVV code at every purchase. This is already very common in Europe and other countries, but we still see many American businesses not asking for CVV.
While this doesn’t ensure perfect protection, it does make it much harder for fraudsters to make purchases with stolen credit card data.
Also, you can make sure that you’re using a trustworthy payment gateway that has proper security in place.
That means checking whether your provider has PCI DSS (Payment Card Industry Data Security Standards) compliance.
While the above can help protect you from becoming victim to criminals who already have stolen credit card data, there are also things you can do to protect your existing customers from joining that statistic.
Never write down any credit card data anywhere – not on a post-it note, not on your phone or your computer. Even if no one steals it from you today, if you end up forgetting that you have stored this information somewhere, it could leak sometime in the future, leading to an illegal card not present transaction.
Finally, make sure that any data that you do collect from your customers is properly secured. That means never using tools like a spreadsheet as a database.
This is a mistake that even large corporations have fallen prey to, and it has resulted in leaks of data about hundreds of thousands of people.
Contact 5 Star Processing To Know More
This sums up some easy ways to protect yourself and your customers from card not present fraud. If you need more detailed information that’s specific to your business or industry, please contact us today and we can answer your questions.