The Huge Risk of Credit Card Fraud to Online Businesses

With the additional security of offline card transactions in the form of chip and pin, online fraud has rocketed. It continues to grow as more fraudsters move online to target a growing audience with the added benefit of less risk and possible anonymity from their scams. Credit card fraud is massive and said to account for approximately 10 to 20 per cent of all online orders.

This is a huge threat for many businesses since credit card payments are their primary payment method therefore the risk is very high for them. Online card transactions are all labelled as "Card Not Present" (CNP) transactions. With banks now passing the risk of fraudulent CNP transactions over to retailers, since they won't guarantee card payments without PIN number entered, the risk of fraud has never been greater.

Thankfully there are a number of initiatives to attempt to reduce online card fraud. Credit card companies and banks have introduced password systems where the customer is passed onto a secure bank system to enter a password at the end of checkout, which is between just them and their card issuer.

While initiatives like these are great, it still leaves the online business open to many fraudulent operators, which result in fraud business costing billions of pounds each and every year. While card transactions are approved it only means that the card is being used on a site is live and not stolen, has sufficient funds but does not guarantee payment. The risk is the card may be used as part of a fraud scheme being stolen from the legal owner which means the money will be gone forever.

There are many ways that fraudsters can get hold of your card details to use fraudulently, from identity theft, customer data hacks on sites or even your site and various other methods in between. The recommendation would be to invest the time and some money in attending the next Marcus Evans fraud seminar, businesses online need protection and it's a small price to pay compared to the potential hole it can leave in company finances.