5 Merchant Processing Tips to Combat Fraudulent Transactions

Strong sales activity is a positive sign for a small business owner. However, chargebacks can destroy a merchant’s cash flow and profitability. Taking vigilant steps toward fraud prevention could strengthen a company’s defenses against financial predators.

Credit Card Fraud

While credit card usage is becoming more popular, it is unfortunate that fraud continues to grow, too.

As defenses against credit card fraud are developed, criminals are busy at work to find new ways to illegally access sensitive financial data.

Credit cards that become lost or stolen may end up in the wrong hands.

If a cardholder is unaware that a major credit card or the data from a personal account is being unlawfully used to purchase various goods and services, a financial nightmare could be brewing.


Credit card fraud and identity theft can ruin a person’s financial reputation and the damage could take quite a while to resolve.

Cardholders receive protection against unauthorized card use, however, merchants may be liable in certain instances for credit card fraud.

Merchants can use a variety of methods to combat card payment fraud.

Request Card Verification Value

When a shopper has the physical presence of a credit card or a debit card, the account number, the expiration date and the CVV details are visible. A cashier can also view this information for card-present transactions.

However, for online and phone-based transactions, a merchant can request that the customer provide specific card details.

For enhanced card protection, the card verification value is generally displayed on the back of credit cards and debit cards.

If a fraudulent purchase is being attempted, a person who only has a cardholder’s name, account number and the expiration date, (as shown on the front of a credit card), it is unlikely that the fraudster will have the CVV number.

Requesting the CVV number for transactions that are made online or by phone can add an additional layer of protection for business owners.

Maintain PCI Compliance

Protocols from the Payment Card Industry Data Security Standard were developed to help safeguard sensitive information for consumers.

Recent data reveals that an astonishing 40 percent of merchants worldwide are not PCI compliant.

Businesses that are not PCI compliant may incur repeated fines and penalties.

Additionally, a loss of customers could occur if a data breach is widespread or damaging to a company’s reputation.

PCI compliance requires merchants to adhere to the following:

  • Use of secure credit card processing equipment
  • Maintain a secure network that includes antivirus software
  • Frequently monitoring and testing all touchpoints where a customer’s data is stored or transmitted
  • Develop a process to record access to a customer’s data
  • Encrypt data transmissions for every transaction

Inspect Point-of-Sale Equipment

A shiny counter display that does not perform highly-secured transactions is virtually worthless.

The amount of money that a merchant might save with inferior point-of-sale equipment is negligible, when compared to the underlying risks.

Business owners are encouraged to make the necessary investment to purchase affordable POS equipment that will securely process credit card payments.

Routine inspections to check for tampering or attachments to card-reading devices are prudent steps toward combating fraud.

Merchants should also routinely check the serial number for point-of-sale devices to ensure that bad actors have not swapped the store’s equipment with a skimming device.

Use an Address Verification Service for Online Transactions

A popular tactic among hackers involves shipping schemes for online purchases.

Most fraudsters will not ship goods to their home when the payment is made with a stolen credit card.

Therefore, a post office box or an address nearby may be used to discreetly receive packages that were acquired unlawfully.

Red flags arise for an address verification service when a shipping address does not match the billing address that a cardholder has on file with the card issuer.

If an AVS mismatch occurs, it is highly likely that the transaction will get declined.

Using an address verification service for online orders is an excellent way for merchants to combat fraudulent transactions.

Share Fraud Tips With All Employees

In addition to performing a thorough background check for all employees, it is very wise to ensure that everyone who accepts electronic payments is on the lookout for fraud.

Advise employees to report any instances of tampering with equipment or other suspicious actions.

Instruct cashiers to frequently wipe point-of-sale equipment for cleanliness and to prevent hackers from lifting fingerprints that are left on the electronic keypad.

Valued Merchant Services is an established leader within the card-payment industry that has received multiple awards for outstanding performance.

We offer secured credit card processing equipment and the lowest processing fees in the country.

Contact us for more information about safe credit card acceptance for small business owners.

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