Finance

Rising Fraudulent CNP Transactions Will Cost CNP Merchants Billions

Written by William Dawsey Posted by Carolina

William Dawsey

As the payments industry transitions into the EMV landscape to safeguard against credit card fraud, Card Not Present (CNP) transactions remain a popular channel for criminals to continue their delinquent actions. According to a new report by Juniper Research, a U.K.-based consultancy, merchants will potentially lose around $15 billion per year by the year 2022 to fraud. In the face of rising fraud, investing in fraud detection and prevention solutions can provide a significant return on investment and security.

What Is Card Not Present?

CNP is the practice of accepting or making a card payment without the need for a physical card to be present during the transaction. CNP transactions are the most common cases of credit card fraud because of a merchant's inability to examine the credit card and verify if the cardholder is, in fact, the one actually making the purchase.

Five of the most common forms of CNP transactions include:

1. E-Commerce Transactions -

   These transactions occur online where the merchant does not have face to face interaction with the consumer. Often, the merchant can make a CVV check during the transaction to validate the card or verify that the cardholder has possession of thecredit card.

2. Over the Phone Transactions -

   These transactions work similar to online transactions except the merchant's only security measure is usually to record the telephone number of a customer when they make a purchase.

3. Mail Order -

   In this type of transaction, customer signatures can provide merchants with a small layer of security. Correspondence from clients can be copied and retained for extra security should they turn out to be fraudulent transactions.

4. Card on File Payments -

   Companies will typically give customers the option to enroll in a type of auto pay system if the consumer pays, or is expected to pay, frequently for goods or services on a subscription basis. This means a merchant will make charges to a customer's card without any interaction with the cardholder since they already have their card information and approval to do so.

   Online retailers will do something similar to this in a "one-click" transaction method. The card information is kept on file for the customer's convenience and they can make purchases with a single push of a button.

5. Cloud Wallet Payments -

   This is a newer type of transaction method that involves storing credit card information on a mobile device/app to make purchases. In this scenario the credit card does not have to be physically present to process the transaction; instead, the app or mobile device is used in place of the card.

As consumers increase their dependence on technology to store their card information and make purchases, merchants, card issuers, phone manufacturers, app developers, and network providers will all be expected to maintain and improve their security so as to ensure safer payment gateways and deter fraudulent CNP transactions.

Some fraud protection services worth looking into include,

• Tokenization data security protocols
• Fraud protection software programming for secure web-based authentication and e-transactions
• PCI-DSS and PA-DSS compliance and certification
• End-to-End (E2E) and Point-to-Point (P2P) encryption implementation
• 3rd party Fraud Management Systems (FMS) including ReD and MinFraud
• Check and transaction fraud monitoring including transaction approval system development
• Data analysis programming, Continuous Controls Monitoring (CCM), and custom fraud parameters development

For more information on fraud protection software development services, visit www.chetu.com/solutions/fraud-protection.php

Founded in 2000, Chetu is a global provider of application development service solutions and support services. Chetu's specialized technology and industry experts serve startups, SMBs, and Fortune 500 companies with an unparalleled software delivery model suited to the needs of the client. Chetu's one-stop-shop model spans the entire software technology spectrum. Headquartered in Plantation, Florida, Chetu has fourteen locations throughout the U.S. and abroad.