EMV and e-commerce fraud - Protecting your online business

January 23, 2017 Risk & Fraud
Vinodh Poyyapakkam
By Vinodh Poyyapakkam, Head of Risk Policy Consulting
Vinodh Poyyapakkam
By Vinodh Poyyapakkam, Head of Risk Policy Consulting

2016 saw a major step forward in EMV (Europay, Mastercard and Visa or more sensibly, chip cards) adoption and now, point of sale transactions are more secure than ever. This growing change to the in-store payments landscape has made a significant impact in lowering fraudulent activity.

Here are a few numbers to think over:

  • VISA reported that over 47% of their cards in the United States were chip enabled and also reported that almost half of their in-store payments came from chip enabled merchants.
  • Mastercard saw a 25% month to month increase in chip transactions, with 80% of their cards in the United States being chip enabled. This led to over a 60% reduction in point of sale card fraud.

However, as the transition to EMV continues and point of sale transactions become safer, a new level of risk has developed in the fast growing e-commerce space. Fraudsters are rapidly shifting their focus to online businesses and platforms, targeting card not present transactions and monetizing stolen identity and financial information. A smart move for fraudsters considering the 16% year over year increase in online transactions in 2016 and a big challenge for online commerce.

So what does this mean for online businesses and platforms? With the increasing risk in the e-commerce space, business owners now have to be more cautious than ever, and must strike the right balance between declining bad payments and not turning away legitimate customers. This is a tough task indeed, but there are preventative measures to take to protect a business from the incoming threats:

  • E-commerce businesses should use the latest fraud prevention tools to detect irregular transactions, and have them individually reviewed by a risk analyst, or even decline them automatically. This can be the difference between a risk free transaction, or a long winded chargeback dispute.
  • Take advantage of the ability to screen suspicious IP addresses and devices where the original payment originated. This can identify fraudulent payments and information uncovered should be stored in a database in case of repeat encounters to soften the damage done to the business.

If both these measures pique your interest, considering using a trusted payments processor with advanced risk technology that can provide all these preventative services for you, mitigating your online fraud problems without driving away your real customers.

 

About the author

Vinodh Poyyapakkam

Vinodh Poyyapakkam, Head of Risk Policy Consulting

Vinodh Poyyapakkam is the Head of Risk Policy and Consulting at WePay. He previously held risk management positions at PayPal and Paysafe Group.

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