Credit Card Processing: Fraud Prevention Strategies You Need to Know

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Unfortunately, credit card fraud is one of the most common kinds of fraud in the United States. In 2021, people and businesses reported more than 390,000 instances of credit card fraud to the Federal Trade Commission.

Many businesses assume that they are safe from credit card processing fraud because criminals only target large businesses. However, without the right merchant services protecting you, you could end up dealing with credit card fraud no matter how large or small your business. Some criminal acts even favor targeting small businesses over large ones.

A lot of people have put a lot of hard work into figuring out which strategies work the best for preventing credit card processing fraud. Read on to learn all about the top strategies you can use to protect yourself from this complicated problem.

Avoid Credit Card Fraud With Signatures

These days, many customers feel frustrated while checking out due to processing fees and changing purchase protocols. This can make some businesses reluctant to add any steps to their purchase processes like asking for customer signatures. However, if you are concerned about credit card processing fraud, it can be worth asking for signatures to prevent it.

If that seems inconvenient, you can compare it to some of the more extensive security processes that some businesses use to protect themselves. If you are looking for that level of added protection, you can even ask your customers to sign an invoice on top of their credit card receipts.

Some businesses even deny transactions if the customer signature does not match the signature on the back of their credit card. You can decide for yourself based on your unique situation how many of these three levels of protection you want to add to your own purchase processes.

Don’t Enter Card Transactions Manually

Sometimes, knowing how to ensure secure transactions is more about avoiding mistakes than doing anything extra. One of the easiest ways to commit credit card fraud is to rely on manually entered transactions.

Sometimes, you swipe a credit card and it is not accepted. At that point, the customer might ask you to enter the credit card number to complete the transaction. However, this can be a strategy for making a purchase with a fake card.

Of course, there is always a possibility that the customer just has a worn-out credit card. However, assuming that is the case means putting yourself at risk for credit card processing fraud.

Invest in Modern Payment Security Tools

Many small business tips emphasize the importance of updating outdated equipment. As criminals get used to old equipment, they discover ways to exploit it. New equipment is often designed to prevent the exact strategies that have become common practice for criminals.

When it comes to credit card processing fraud, it can be worth investing in EMV hardware. Many credit card fraud criminals rely on cloning credit cards. However, modern ship cards are much more difficult to clone.

As a result, using EMV hardware makes you a less attractive target for many bad actors. On top of that, investing in this hardware will help you provide added convenience to many of your customers.

It is worth noting that banks used to bear the liability for credit card processing fraud. However, merchants who have outdated equipment can now bear that liability because they are considered the least secure party involved.

Consider Asking Customers for Identification

Another simple way to cut down on credit card processing fraud is to ask your customers for ID. Keep in mind that your customers are not legally required to provide you with this. At the same time, you are not required to sell them something if they fail to provide their identification.

Some businesses are reluctant to do this for every purchase. However, you can always make this a discretionary policy. You might want to focus on asking for ID before completing any especially large transactions.

Protect Your Card Processing Hardware

Some criminals do not even bother to try to fool you into thinking they are using a valid credit card. Instead, they focus on stealing your hardware.

Make sure that your hardware is secured so that no one can pick it up and walk away with it. You might also want to store your hardware in a safe place when you close up your business for the day.

Read Merchant Guidelines From Card Networks

When you sign a contract with a card network, that network will often provide you with merchant guidelines. These guidelines will outline how you can avoid credit card processing fraud.

Make sure to read through these guidelines to learn from the expertise of these large companies. They can give you small business tips about the latest fraud techniques and how you can avoid them.

Use Fraud Prevention Strategies Like Asking for Addresses

Have you noticed that more credit card processing machines ask for zip codes these days? This can be a powerful method for preventing credit card processing fraud.

On top of that, copying this method may annoy your customers less. After all, almost all of them will be used to going through such processes while buying gas. On the other hand, if a customer cannot provide a zip code, that may indicate that they are using a stolen or cloned card.

Asking for addresses can be one of the simplest and most powerful ways to make yourself less vulnerable to fraud.

Avoid Credit Card Processing Fraud With Merchant Services

As time goes by, the strategies we need to implement to avoid credit card processing fraud continue to change. We hope that this article has given you an updated understanding of how you can prevent credit card fraud at your business.

Sometimes, it makes more sense for you to focus on growing your business while outsourcing credit card processing to merchant services that specialize in it. Reach out and get in touch with us at any time to learn more about how you can find secure and reliable payment processing services for small businesses!

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