- January 6, 2020
- Posted by: admin
- Category: Uncategorized
In this era of technology, everything is changing even our mode of payments. Customers’ demands are also changing, now they want a safer, easier, quicker and more versatile mode of payment. And an online payment through credit/debit card has emerged as the most used and accepted form of payment gateway. So as a merchant if you want to take business to the next level of growth then it is paramount important for your business to stay updated and offer CNP payment processing to customers.
But CNP payment processing comes with additional risks which need extra security and risk assessment. Before discussing it in detail let’s briefly talk about CNP payment processing.
What is CNP payment processing?
CNP stands for “Card-Not-Present” transaction, in this type of transaction credit/debit card is not used directly. When transaction is completed without physical presence of cardholder and card to seller is known as CNP transaction. The information of card is generally exchanged over email or phone. Here, the main point to note is that any transaction which is done via debit/credit card is not CNP. Transaction can be called CNP only when cardholder and seller are not present in the same place.
Risks attracted by Card-Not-Present payment processing
Card-Not-Present payment processing comes with a lot of benefits such as quick and easy payment solution from anywhere at any time but it also attracts risks which can turn out to be a big headache for merchants if not handled properly. Here are some common reasons which make it necessary to get extra security for CNP payment processing:
- Phishing: This type of fraud is increasing rapidly and it has grown as a serious issue. Fraudsters try to obtain confidential and sensitive information like usernames, passwords, credit card or bank account numbers to make fraudulent purchases. Usually, stealing of information is done via an email or instant message which directs the victim to a website asking to submit personal card details.
- Friendly fraud: A very common problem faced by merchants which not at all friendly as its name suggests. A friendly fraud is also known as false chargebacks where customer dispute filed by him by mistake. Customers with any reason try to make legitimate transaction look inauthentic to get their money back.
- Carding: Generally, small purchases don’t get under the circle of suspicion and fraudsters take advantage of it. Before playing the big game they validate stolen card information with real-time transaction processing. If their fraudulent purchase gets successfully processed, they will either sell the information to other criminals or make additional big fraudulent purchases.
- Account takeover: Another dangerous type of fraud is account takeover; they take over the user account and put sensitive information at high risk. While users access their accounts, social networks or email addresses, fraudsters target them with the intentions of stealing these credentials to make fraudulent purchases.
- Malware: Fraudsters are smarter than we think. If they fail to get sensitive information from phishing, they use some app and conduct background monitoring. The malicious app runs in the background and disrupts computer operation, gather sensitive information. They can even get access to private computer systems.
- Location masking: It is an indirect threat to cardholders. It is also known as domain masking, where fraudster traps customer by cheating, the website will look authentic; IP address will look fine whereas reality would be completely different. Buyer will think they are getting legitimate premium inventory but will be left with low quality impressions which do not perform.
- Very easy process: It becomes important to have extra security and proper risk assessment while using CNP payment system because to make a transaction successful physical card or even the PIN is not required, with mere card details CNP transaction can be done. With easy and quick facilities, banks and merchants try to improve the experience of the customer but this makes harder for the merchant to verify that the cardholder is indeed authorizing the transaction.
- Chargebacks: Every online merchant tries best to get minimum chargebacks as it deeply affects the goodwill of the business as well as it is costly. There are authentic chargebacks when customer is genuinely unsatisfied with the product service offered and merchant is not helping customer in any way. But in recent years many false cases of chargebacks have come in highlight.
1. The cardholder intentionally make a legitimate transaction looks like a fraud with the intention of getting money while retaining the product and service provided. In the end customer gets everything and merchants suffers with great loss.
2. Fraudsters steal bank account and credit card information and commit criminal credit card fraud. Now the victim cardholder can contact the issuing bank and report the fraudulent transaction and can seek for money return from the merchant by filling chargeback.
- Harder to prevent: Modern technology has improved the life in all parts of life but with this convenience comes risk. The growing technology has itself made it difficult to prevent frauds.
There are different kinds of risks involved but let’s not forget, “higher the risk, the higher the gain”. With smart analysis and assessment these frauds can be monitored. Proper measures should be taken to prevent chargebacks like by keeping an eye on the activities of the customer, you can also mark area with higher chargeback and prevent dealing with such requests. Here, an important role is also of your merchant account provider because they can provide you security and help you in taking decisions in the best interest of your business. IPayTotal is one of those few leading merchant account providers which work 24/7 with the professional team to make your CNP payment processing secured and risk free.