How Can my Business Prevent Credit Card Fraud? | Credit Card Verification

by j.patrick.1@verizon.net

Credit Card Verification

If you’re a small business owner, you have to walk a fine line between accommodating your clients and customers and preventing credit card fraud. Credit card fraud is not just imaginary. Almost half of small businesses consider credit card fraud to be one of the biggest problems their business faces.

Technology is making it more difficult for criminals to commit credit card fraud. Encryption, verification, and transaction processing technology are much more sophisticated than they used to be.

Asking for identification can be a prickly issue. There are cardholders who insist that if you accept Visa or MasterCard that the signature on the back should be sufficient. There are others who write “Ask for ID” over top of their signature. In most cases, if you ask for photo identification, people will agree. If they don’t agree you have to ask yourself if the sale is worth alienating a client. It’s a tough decision, but something you should think about well before it has a chance to happen.

Know what a credit card’s security features are. Valid credit cards generally have a hologram that changes color when you tilt it, an erase-proof signature panel, a magnetic stripe, and an embossed account number on the front that matches the number printed on the back. If you are handed a credit card that is suspicious to you, call the “hotline” number your payment service provider has given you to request transaction authorization.

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MasterCard and Visa have the CVC2 and CVV2 verification methods for “card not present” transactions, such as phone or internet transactions. CVC2 and CVV2 are three digit codes on the back in the signature panel of each MasterCard and Visa following the 16 digit account number. When you use the CVC2 or CVV2 verification, the card issuing bank checks the CVC2 or the CVV2 value and let you know if the information matches. Though it does not affect the transaction authorization, it can help you determine whether or not to continue with the sale.

The Address Verification Service, or AVS lets merchants who handle “card not present” transactions confirm address information with card-issuing banks. It then returns codes telling you, the merchant, whether the figures match. Like with the CVC2 and CVV2 authorization, this does not affect the transaction, but it can help you determine whether to continue with a sale. The AVS only works with credit cards issued in the US.

As a small business owner, you are asked to do many different things on a daily basis. One of those is to be the first line of defense against credit card fraud. It isn’t easy, but with a few simple precautions, you can keep credit card fraud from taking a bite out of your profits.