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5 Ways of Minimising Risk as an Online Merchant

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by Startacus Admin

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Receiving money from your customers as an online store is almost always done using a third-party payment processor, which means that much of the security around payment method and credit card security isn’t your responsibility, but that doesn’t mean there aren’t other risks to you. Fraud is a big problem in the online retail and services space, particularly in some specific industries where the prevention mechanisms need to be higher and more robust. It is good practice however, to implement as many strategies to prevent as many fraudulent transaction attempts as possible in your online store checkout process and policies.

Let’s have a look at some of these ways that you as an online business can prevent some common fraud techniques like stolen credit cards and chargebacks.

Use a Reliable Third-Party Payment Processor

The most important part of maintaining a well-run payment process is ensuring that you partner with a good and reliable merchant service, since they’ll be handling all the money that your business receives. Selecting not only the correct payment processor, but one that has robust security is important. Using a company like Merchant Advice Service, who have industry experts on call to help you make the decision, is a great way to ensure that your merchant service is reliable and safe. They will even apply to these merchant services for you, so you can be sure you’ll get great rates too.

Keep Your Website Updated

man coffee cup penIf you’re using your own platform to host your ecommerce store, or if your company provides a bespoke services solution that requires your own software, make sure that you always apply the latest security and software updates. You can also keep an eye on any security announcements for your platform and make the necessary changes or updates to mitigate them. Simple and responsive website hosting and CMS or ecommerce system maintenance are essential in staying safe as an online store or company.

Use a Hosted Ecommerce Solution

If you want to take the stress away from hosting your own software and don’t need anything too customised or bespoke, using a hosted ecommerce solution, or a webhosting company that offers to take care of maintenance for you means that you have one less thing to worry about. There are plenty of hosted ecommerce solutions on offer, so you should be able to find one that offers everything you’ll need for your online store.

Perform Some Basic User Checks on Registration

Screening your potential customers doesn’t have to be an invasive process and often can be done without your users even knowing about it or having to perform extra steps. Usually your customers will understand the need for some extra verification and sometimes even appreciate it because it helps keep them safe too. You have two opportunities to do data verification checks on your users – once when they register on your website, and again when they check out.
Some of the things you can do for verification as part of your user registration process are to verify a user’s identity. Some of the easier ones to implement are as follows:
  • Ensure that the registration is taking place by a human and not a bot or script by requiring the solving of a captcha.
  • Require that the new user verify their email address to complete their registration process.
  • Require the user to provide alternative contact information, like a mobile number.
  • Don’t allow users using temporary or disposable email addresses to register.
  • Use IP address location information to verify the user’s inputted billing or physical address.

Use Credit Card Security to Your Advantage

On checkout, there is another opportunity for you to do some user data verification checks, and many of these exist as part of credit card security. When a user does check out, this data verification becomes even more important because money is about the exchange hands. Here are some of the things you should be using to verify your user data:
  • Require AVS (address verification) for your user, to ensure the billing address they’ve entered is the same as the registered billing address for the credit card they’re using.
  • Always ask for the credit card CVV number and expiry date to verify they match the card number.
  • Watch for things like duplicate transactions, users using different shipping addresses with the same credit card, or a number of declined transactions in a row.
  • Stop the purchase if a user tries to enter too many different credit card numbers which keep getting declined.
  • Keep a record of declined credit card transactions or fraudulent purchase attempts and flag them for additional verification.
There are of course other verification checks that should be done, but many of these will be done by the merchant service.

Take Heed of Strange or Suspicious Activity

pexels 230544Don’t be afraid to manually verify any transactions which appear like they might be suspicious before shipping any goods. There are a few warning signs that are well documented that you should be checking for, most of which are when potential customers ask for deviation from your standard process.

For example, orders that might stand out for extra scrutiny are those that are much bigger than normal or large orders for which customers have asked for fast shipping. Pay attention to orders where the billing and shipping address vary wildly, like if they are in different countries or miles apart. Watch for fake information too, particularly phone numbers and email addresses. If you suspect the order might be fraudulent, check things like if the address details are clearly suspicious e.g. it is the address of a house that is for sale or rent that doesn’t appear to have permanent occupants.

Staying safe as a merchant is a tough job, but it’s made easier by using tools designed to help you augment it with some common sense and reliable third-party partners like couriers and merchant services. With a dedication to mitigating as much online credit card and other forms of fraud as you can, your online business has the best chance of being successful.

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Published on: 17th February 2020

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