Retail trends are pushing small businesses into online sales across industries, from retail and wholesale, to food and beverage. E-commerce sales are soaring, and your business is losing out if you aren’t tapping into this market! Global e-comm sales are anticipated to reach $3.5 trillion (yes, you read that right) by 2019.
In 2016, Visa Canada estimated that almost 80% of all fraud occurrences took place in card-not-present (CNP – as in, payments taken online, via mail, or over the phone) instances. In a marketplace that almost demands online sales, how can you protect your business from fraud?
Most instances of card-not-present fraud involve stolen credit cards or personal banking information, meaning it’s the cardholder who is at risk. However, there are rising instances of chargeback fraud, where the fraud is perpetrated by the cardholder themselves. Cardholders will make purchases online, and then claim fraud. Should the merchant be unable to prove that the cardholder authorized the transaction, the buyer is refunded their purchase amount and can retain the bought goods.
How can you protect your business? Here’s a few tips we recommend:
1) Know Your Best Customer
Monitor the shopping habits of your customers, and understand what a “normal” order looks like. If you’re a small retailer selling candles, your average order size might be between $40-80, meaning an order of $900 would be considered abnormal. If you’re a fashion retailer, an order for multiple of the same item (ie. 10 pairs of the same style of designer jeans) would be a red flag. Big ticket items that can be sold for cash profit (like electronics) are a common source of fraud.
2) Monitor Sales Closely
Tracking your sales helps prevent fraud, and is also a great way to understand your business better! Consider using Address Verification Services, which will cross reference a buyer’s address with typical credit cards (VISA, AmEx, MasterCard, and Discover).
3) Verify Sales
Ensure you require the use of a Card Verification Value (CVV) – the 3-4 code digit in the back of credit cards. Stealing credit card information has gotten more difficult thanks to the use of CVV, so requiring these with all purchases can help deter fraudsters.
Looking for more tips on how to monitor and understand your sales and customers, and prevent fraud? Contact Inclera. We’ll be happy to help you design point-of-sales solutions that protect you, and your customers.