How to Mitigate Credit Card Fraud in Online Businesses?


Online merchants are common targets of financial cybercriminals. As per a study, $24.26 Billion was lost due to payment card fraud worldwide in 2018. The reason behind such frauds is the lack of security measures adopted by the businesses. Online merchants and payment solutions are commonly targeted as most of them don’t adopt any rigid security measures to verify their customers.

Some online merchants are using AI-based KYC and document verification solutions, and other in-house measures to mitigate credit card fraud in businesses. Below is a list of measures that can be adopted to mitigate credit card fraud on your online platform, website, and app.

A credit card fraud could be as simple as some online purchase of luxury goods and as dangerous as ambiguous financing of some terrorist group. So it is crucial for online merchants to take concrete steps to mitigate credit card fraud.

Methods to Mitigate Credit Card Fraud

Online document verification

There are plenty of outsourced document verification solutions that can be used to verify the identity documents and credit/debit cards of your customers.

Such solutions screen the document, collect the information from it and then verify the information and the default format of the document. It verifies the customer through an identity document and makes sure that the right person is making the payment.

Verification of the credit and debit cards through such solutions reduce the risk of falling prey to identity thieves, and even a friendly fraud (a credit card fraud that is conducted by the original owner of the credit card).

Face verification

Use face verification to make sure the original owner of the card is making the payment through the credit card. Sometimes the criminals use stolen identity documents and credit cards of a person to make online payments. In this case, even if the identity document is verified before accepting the payment the criminal might get past the check post of document verification.

That is why an increasing number of online merchants are using face verification to onboard customers and for successive logins in the future.

This additional security protocol will make sure that the original person is making the payment even if the identity document and credit card are stolen by some criminal.

Face verification solutions are difficult to manipulate as they verify the liveness and physical presence of the original person through 3D depth perception. It makes sure that paper backed or photoshopped image is not used for verification.

Enhanced due diligence

Verify your customers before onboarding them on your online platform and define risk rating to the customers based on their credentials. For example, if the customer is from a high-risk country then practice Enhanced Due Diligence(EDD) on such clients. EDD could include AML screening of customers from high-risk regions.

This measure can be adopted by all businesses to exercise advanced security, but it is crucial for financial services businesses. Online businesses like cryptocurrency facilitators, online payment solutions, online banking service providers, etc. Such businesses are common targets of credit card frauds, and once a criminal has exploited your platform to transfer funds to a terrorist group the credibility of your customers will be affected.

To wrap up, there are several types of credit card frauds like Card Nor Present (CNP), Counterfeit card, Friendly fraud, etc. The above-banking fraud investigation will help you to mitigate the risk of such fraud in a cost-effective manner. Technology is the favorite tool of the criminals these days and it is used widely to manipulate online merchants. Online document verification, identity proofing, and face verification solutions can prove to be your loyal friends against technically advanced criminals.