Preventing credit card fraud is beneficial for everyone involved. Although individuals take great care in safeguarding their credit card details and personal information from potential thieves who could cause harm to their credit rating, the responsibility of resolving any fraudulent activity falls upon the card issuers and merchants rather than the online shoppers themselves.
For merchants who sell e-commerce or payment service providers, as well as card issuers who care about preventing credit card fraud. There is some good news. Logibiztech offers a 3D Secure security solution to prevent fraud for all responsible parties as well as payment domains for authentication.
When Credit Card Fraud Takes Place
You may be wondering, what we mean by the term “domain”? It is the 3Ds of 3D Secure that refer to the domain that issues the certificate as well as the acquirer’s domain, and the domain of interoperability.
In a payment workflow, the merchant or the bank that is acquiring the payment processor initiates a transaction that requires authentication. The authentication is performed via the issuer domain, or the bank or card issuer. This exchange (request to verify and confirmation reply) with the merchant’s domain that acquires the card and the cardholder’s issuing domain occurs in the interoperability domain.
If a credit card is enrolled within 3D Secure, it will be validated in the domain of interoperability. For instance, Visa secure and American Express SafeKey are both enrolled.
Credit card fraud on the internet — specifically credit card and debit card that are not in use (CNP) fraud compromises the authentication process by using stolen credit card data.
Therefore, shouldn’t the responsibility not rest placed on credit or debit card holders? We are aware that consumers need to be aware of fraudulent credit card transactions, but they’re not the sole responsible party. All players in the payment industry must protect credit card data.
Prevention of fraud using credit cards is in everyone’s interests
The prevention of card fraud including credit and debit within the industry of payments since it is a major reason for loss of profit for online merchants as well as a source of stress for consumers. The concern of identity theft — which is a major cause of fraud in the payment industry has risen dramatically.
Consumers are careful about guarding their credit card numbers as well as personal details from thieves who could wreak ruin on their credit score however, the responsibility to fix fraud on credit cards is the responsibility of merchants and card issuers and not online consumers.
Based on the 2021 Nilson Report, the financial losses due to debit and credit fraud on merchants, acquiring banks, and issuing banks totaled $28.58 billion by 2020. Of all the affected parties the card issuers took on 80 percent of the burden. Fraudsters could cost merchants merchandise, and increase transaction fees, as well as customers. In addition, banks that issue certificates are unable to save time and money dealing with chargebacks. Criminals who illegally access the personal details of customers violate the customer’s trust and impact the bottom account of both the financial and financial services sectors.
The use of debit cards as well as credit cards in place of cash at the point of sale or online transactions is on the rise. Europe’s top six debit and credit card issuers raked in more than $1.2 trillion in transaction volume for 2020. The rate of a transaction is anticipated to rise by 41.4 percent for cards like Visa, Mastercard, American Express, Discover, UnionPay, and JSB and the number will increase to 642 billion in 2025. There’s a significant incentive to identify and stop the fraudulent use of credit cards to safeguard customers, and brands and lower the cost of credit card and debit card fraud.
Fraud on Cards is on the Rise
Since e-commerce is becoming the norm for purchasing almost everything online, fraudsters from eCommerce find and exploit vulnerabilities everywhere, including sales channels as well as payment methods.
For instance, criminals can take card information like the card’s number, validation value, date of expiration, and cardholder’s name from the magnetic stripe through tampering using the reader. Card skimming is a lot harder to accomplish due to the EMV chips or smart chip technology. However, fraud prevention in-person prevention is a major factor in the rise in fraud on credit cards because fraudsters constantly change their selling channels.
In addition, CNP fraud is difficult for merchant payment gateways and payment service providers to identify due to two reasons. There are two reasons. First, there are lots of kinds of CNP fraud to deal with such as innocent fraud (common) to fake identity theft (uncommon and highly sophisticated). Additionally, eCommerce CNP fraud doesn’t rely upon stolen credit card details. In fact, it is possible for cyber criminals to utilize your login and passcode or even be connected to the cardholder.
If the transaction is believed to be fraudulent, what should the first thing a credit card company do? They will challenge the suspect fraud. If the bank that issued the card is not right and a legitimate transaction is rejected. What is a consumer to do? They could use another card or go to another site for eCommerce that can fulfill. Who wins? It is possible to claim that all three victims of fraud on credit cards. Which one is the biggest victim? According to Visa Credit Card Fraud, it is predicted to cause businesses to lose USD75 billion from 2019 through 2023 all over the world.
Fortunately that the 3D Secure 2 fraud prevention solution can reduce the risk of false denials and protects the client as well as the bank that issued the card and the merchant from fraudulent transactions.
How Can eCommerce Solve the Issue of Fraud with Credit Cards?
The prevention of fraud on credit cards is essential to reducing the risk of debit and credit card CNP fraud. Banks that use the most precise authentication system, 3D Secure 2, have reduced fraud by 40 percent and cart abandonment by 66% and reduced the processing time of payments by 80percent.
Since fraudsters have a variety of ways to get access to credit card data such as phishing, skimming, and buying them on websites that are dark, 3D Secure 2 solutions utilize an enhanced dataset to ensure a secure authentication of the customer. Since 3D Secure 2 is mobile-enabled and is not dependent on an online browser it is able to access additional conditional information that aids to spot and reduce the risk of transactions that are deemed to be fraudulent, such as:
- Big purchases
- Same-day shipping
- Missing email, shipping, and billing details
- Card information that does not correspond with those on the file
Furthermore, 3D Secure 2 provides greater interoperability among online merchants and financial institutions that issue cards. There are challenges to suspected fraud that be made between the card issuer and the cardholder. When removing the merchant from this procedure, in the event that the transaction is not authorized and a chargeback is placed in the process, liability shifts from the cardholder to the issuing bank. The best part is that the enrollment process for 3D Secure 2 for most international card schemes will become automatic by the end of October 2022.
Big problems call for big-hearted solutions
Merchants on the internet and card issuers have a common page in the fight against the security of credit cards. Cybercriminals are constantly finding new methods of obtaining credit card data every party should employ methods and strategies to keep fraudsters off their tracks. The Logibiztech 3D Secure fraud-prevention solutions designed for issuers as well as merchants can give your customers peace of mind and lower costs associated with CNP fraudulent rates. Get in touch with us for more information regarding Paybiz3DS2 as well as PaybizACS.
How is credit card fraud prevented?
By utilizing mobile payment applications such as Apple Pay or Google Pay, you can enhance your credit card fraud protection. These apps implement a technology known as tokenization, which enables you to make payments without disclosing your real credit card account number.
Who is involved in the process of credit card fraud?
The majority of payment card fraud investigations are managed by the bank that issued the card to the cardholder, rather than by a card network such as Visa or Mastercard.