Eight out of 10 businesses that transact online will be the targets of credit card fraud at some point.
This is according to PayGate founder and MD Peter Harvey, who points out that the focus will be on those that provide payment gateways to help their clients manage risk.
Harvey points out that, traditionally, merchants have carried all the risk of fraudulent credit card activity. He says the problem lies with the fact that, if someone shopping online used a stolen credit card, the merchant would be liable.
Mastercard and Visa introduced 3D Secure to protect merchants, explains Harvey, “but many of the US banks aren't enrolled in the system - so the fraudsters just use US credit cards.
“The merchant isn't directly liable because they've made an effort to verify the card, but they still lose out in the long run. If a site is a frequent fraud victim and the bank starts losing money, they may just shut down your merchant account entirely.”
“At some Web sites that are particularly attractive to fraudsters, we're blocking 50% of all transactions,” adds Harvey.
However, he notes that some transactions are not obviously fraudulent, but are still flagged as medium-risk. PayProtector provides a daily report to enable merchants to investigate further, if necessary. If the card checks out, they can go ahead as normal; if there's a problem, they have a chance to refund the transaction before they ship the goods.
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