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How To Get An Inexpensive Merchant Account

Fighting Ecommerce Fraud

The media never cover this, but it's you, the vendor who really gets hurt by credit card ecommerce fraud. The cardholder's loss is nothing. But the vendor who gets hit with that fraud loses the whole amount. How serious is it? Is it something you should be really worried about?

Yes! And even more so if you're selling high priced items like computer software or stereo equipment. Consider:
  • Online merchant services estimate anywhere between 5-25% of transactions are fraudulent.
  • 12 times more ecommerce fraud exists on Internet transactions than "brick and mortar" transactions.
(Source: Meridien Research, Gartner Group)

Consider this example:

You sell a $2,000 gaming computer system. But the card was fraudulent.

Now you're out the $2,000 worth of equipment, the thief has the computer system, and the owner of the stolen card is out nothing.

Plus, you now owe a penalty fee to your merchant account processor!

And if it happens enough, you may lose your merchant account!

But wait, you say. I got an authorization number. So I'm good.

Please. That only means the card hasn't been reported stolen and that the card isn't over the credit limit.

Which is just another way of saying, it means very little.

Plenty of credit card numbers are stolen without the owner of the card ever realizing it until the charges end up on their bank statement. And who is to say a stolen card is more or less likely to go over the spending limit?

So the bottom line is:

Verifying the credit card order is your problem.

The best way to verify card information is with a third-party system. They bundle services that go beyond the basic ecommerce fraud detection that will come with your merchant account.

In addition, watch for these red flags:
  • Different "ship to" and "bill to" address
  • International orders (once it crosses the border, you'll never get it back)
  • Next day delivery (plenty of customers will want their product right away ... but so will those perpetrating ecommerce fraud.)
  • Unusual number of items/shipping address/shipping instructions
Yes, this is tedious stuff. If the dollar amount is low, be realistic. Your  fraud rate will be low and it likely won't be worth your time and effort.

But if the order is expensive (in comparison to your average order) and it raises one of these red flags, don't hesitate to call the cardholder before you ship the items. Most customers will appreciate the extra caution.

Return to the article "Avoiding the Dreaded Chargeback"

Related Pages

Debit Card Processing
E-commerce merchant account information
Make Any Site Sell
Echo Merchant Account
Limit Ecommerce Fraud By Taking Simple Steps
Inexpensive Ecommerce Internet Merchant Accounts
Finding A Foreign Merchant Account For Your Business
Free Credit Card Processing Software Information
Guaranteed Merchant Account
High Risk Merchant Account
The Final Word on Inexpensive Merchant Accounts



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