One of the hidden costs of running a business is dealing with fraud. Every dollar of a fraudulent transaction costs firms $3.75 to clean up.
That can add up quickly and hurt your ability to run your business effectively.
Small business owners know that fraud is a risk, but they don’t think it will affect them that much. That is until it actually happens.
They’ll be unprepared to deal with the consequences, and fraud could end up forcing a business to close.
Credit card fraud is hard to fight because criminals always seem to be one step ahead. It doesn’t mean that it’s impossible, though.
You just have to know what to do. Keep reading because you’re going to learn the top credit card fraud prevention strategies to protect your business.
Review Your Risks
Credit card fraud comes in many forms. Someone might show up at your retail location and try to buy something with a stolen credit card.
A hacker could have bought credit card information on the dark web and used that to buy something online.
You need to prepare your business for these possibilities and more. The starting place is to review your current risks.
Review the steps to accept credit cards at your establishment. Do you ask customers for ID when they pay with credit cards?
Are there policies in place for staff members to follow? How do you handle online transactions?
You’ll be able to uncover gaps where fraud becomes possible. This allows you to enact fraud prevention strategies.
It also helps to know how much your customers typically spend. That allows you to recognize transactions that fall outside the norm as possible fraudulent transactions.
For example, if your customers usually spend $20 per transaction, and someone spends $500, you should flag it as possible fraud.
You don’t want to lose the sale, but you also don’t want to pay thousands to recover from credit card fraud, either.
Learn About Your Industry
Some industries have a higher risk for fraud than others. The obvious ones are the gambling and dating industries.
There is an entire list of industries that are considered high-risk. These are businesses that have a high propensity for fraud and chargebacks.
The travel industry is one of those industries. Believe it or not, the furniture industry falls under this category due to the high percentage of chargebacks.
You’ll need to learn about your industry and find out if your business is a high-risk one or not. If it is, you’ll need to find a payment processor like Bankcard Services.
Work With Your Payment Processor
Your payment processor may seem like an enemy because they charge high fees so you can accept credit card payments.
It can work in your favor to see your payment processor as a partner, not a necessary evil.
Payment processors want to prevent fraud because it costs them money, too. They monitor your transactions and will flag suspicious transactions.
If you have a transaction that is legitimate but falls outside of your normal range of transactions, call the payment process and notify them.
That will save headaches for you and your customer. Your customer will experience a smooth transaction while you get paid on time.
Did you know that payment processors have a special code to ask for authorization? That’s known as Code 10.
This allows you to contact your payment processor without the customer knowing and flag the transaction before it gets processed.
The payment processor can deny or approve the transaction based on your suspicions.
Don’t Let Customers Be Bullies
Customers seem to have gone over the edge in recent years. They went from nice and normal to punching people in the face if they don’t get their way.
You and your staff may face threats of bullying every day. That may make everyone scared to speak up if they think something is wrong with a transaction.
It’s best to be firm with customers and have a no-bullying policy, even if it means losing a little business. Customers don’t have the right to intimidate you or your staff.
That will help prevent fraudulent transactions because you or your employees were too scared to deny a customer.
Invest in Online Security
Card-not-present transactions are the ones that carry the highest risk. These are charges where you don’t see the card because it’s done online.
You can implement a couple of ways to reduce fraud when accepting online payments. Asking customers to enter a zip code and CVV (card verification value) number is helpful in avoiding fraud.
Discover the Latest Technology
The financial industry does everything possible to help businesses with fraud protection. That includes investing in new technologies.
We’ve gone from swiping a card to get a card imprint to digital point-of-sale systems. Now we’re moving towards mobile payments.
Customers only need a phone to pay. You’ll want to make sure that you’re up to speed with the latest technology.
Not only will it help you provide a better experience for customers, but you’ll be able to avoid fraud because these new systems have the latest security features.
Credit Card Fraud Prevention and Detection
You don’t need to stop accepting credit cards to avoid credit card fraud. You do need to make sure you know how to detect and prevent fraud.
The tips in this article showed you some steps you can take to accept credit card payments without putting your business at risk. Review how you accept payments and work with your payment processor to reduce fraud.
If you found this article helpful, you’ll learn a lot from the other business articles on the blog. Check them out today!
