Card-not-present (CNP) transactions are those in which the cardholder is not physically present when the transaction takes place. This can happen for a variety of reasons, such as when a customer makes a purchase online or over the phone.
CNP transactions carry a higher risk of fraud than in-person transactions because it is more difficult to verify the cardholder's identity. For this reason, merchants who accept CNP transactions often require additional security measures, such as 3-D Secure or AVS verification.
3-D Secure is an authentication system that was developed by Visa and Mastercard to help reduce fraud in CNP transactions. It works by adding an extra layer of security, such as a one-time password, that the cardholder must use to complete the transaction.
AVS verification is another way to help reduce fraud in CNP transactions. It works by checking the billing address of the cardholder against the address on file with the card issuer. If the two addresses do not match, the transaction will be declined.
There are a few things that you can do to help reduce the risk of fraud when accepting CNP transactions:
1. Use 3-D Secure or AVS verification.
2. Require the cardholder to provide additional information, such as their date of birth or social security number.
3. Use Address Verification Service (AVS) to verify the billing address of the cardholder.
4. Require a signature for all CNP transactions.
5. Keep your software and systems up to date with the latest security patches.
6. Monitor your account for unusual or suspicious activity.
7. Report any fraudulen activity to your card issuer or processor immediately.
The best way to reduce the risk of fraud is to take steps to verify the identity of the cardholder. 3-D Secure and AVS verification are two great ways to do this.
If you are ever unsure about a transaction, it is always best to err on the side of caution and decline the transaction. This will help to protect you from fraud and chargebacks.
Chargebacks are when a cardholder disputes a transaction with their card issuer. If the card issuer decides in favor of the cardholder, you will be responsible for the chargeback fee as well as any refunds or returns that may be required.
To avoid chargebacks, it is important to make sure that you have all of the necessary information from the cardholder before you process a transaction. This includes the full name, billing address, and card number.
It is also a good idea to keep your software and systems up to date with the latest security patches. This will help to protect you from fraudsters who may try to take advantage of vulnerabilities in your system.
Finally, be sure to monitor your account for any unusual or suspicious activity. If you see something that doesn't seem right, be sure to report it to your card issuer or processor right away.
By following these tips, you can help to reduce the risk of fraud and chargebacks when accepting CNP transactions. 3-D Secure and AVS verification are two great ways to verify the identity of the cardholder. You should also require additional information from the cardholder, such as their date of birth or social security number.
