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As I was looking back at a few of the posts on here, I noticed that in January 2006 and January 2007, posts were made regarding fraudulent transactions (Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks and Fighting Fraud in your E-Commerce Store respectively were wrote).
Since the holidays are over, now might be the time to consider taking another look at how your transactions are vetted / scrubbed when a consumer orders your product(s). The Quantum Gateway is one of the very few electronic payment gateways that offers merchants many options to help prevent fraudulent transactions and chargebacks (including the Quantum Vault - allowing the merchants to safely secure credit card numbers on the Quantum Gateway's secure servers) at no extra charge. During the holidays, volume is usually higher on the Internet and fraud also increases. Merchants are less reluctant to vet / scrub the transactions as they should because this might delay the order process. People rely on this, especially this time of the year, to take advantage of the merchants. Now is the perfect time to consider Changing Merchant Account Providers that might have a better electronic payment gateway, like the Quantum Gateway - which has more vetting procedures built into the electronic payment gateway at no extra charge. This allows the merchant to have the transaction scrubbed before it is even processed, usually saving the merchant a transaction fee (First Data Might Be Overcharging Merchants (on Transaction Fees)).
However, chances are pretty good that you are already vetting the transaction some with Address Verification Service (AVS) and Card Verification Value / Card Verification Code / Card Identification Code (CVV/CVV2 / CVC/CVC2 / CID). These are some very basic vetting procedures, but the merchant can do a lot more to help protect against chargebacks and fraudulent transactions. Some of the other ways to vet a transaction:
These security features can be used during the checkout process with no extra time involved from the merchant. The system will do everything for you - protecting you and saving you time. The features are offered to you at no extra charge and you get the fraud prevention tools just like the Fortune 500 Companies.
While you have done quite a bit to ensure the electronic transaction is not fraudulent, you can still do even more. If you are using MaxMind GeoIP - you should take advantage of the other features it offers. You can purchase the MaxMind services from the company itself and build this into your checkout process or rely on the Quantum Gateway - decreasing development time and money and possible checkout errors.
The extra features that MaxMind offers include letting the merchant know:
Besides no development code being added to the checkout process, the merchant can set the "score" through the Virtual Terminal. Doing this, this prevents the transaction from being sent to the electronic payment gateway, saving the merchant a transaction fee, on top of a possible chargeback.
Personally, we were never supportive of this feature from Visa and MasterCard, known as Verified by Visa (VBV) and MasterCard Secure Code (MSC) - Verified By Visa - MasterCard Secure Code: Things You Should Know. One of the bigger reasons was because the merchant had to add to the checkout process and a lot of times, this feature would time out on the consumer during the checkout process, and the merchant might lose the sale. Many merchants had complained about this feature even online and decided against it.
The Quantum Gateway though might have helped merchants by adding VBV / MSC into their gateway. This requires no extra development, and the merchant can easily turn off this feature at any time in the Virtual Terminal. This helps the checkout process with the merchant since everything is handled by the electronic payment gateway.
Another benefit of using MSC allows the merchant to accept Maestro branded cards. Contact your merchant account provider for more details.
Card Verification Value (CVV / CVV2), Card Verification Code (CVC / CVC2) and Card Identification Number (CID) (Card Verification Value - Card Verification Code - Card Identification Number) is / was a way the card associations (Visa / MasterCard / American Express / Discover) came up to help verify the transaction. It was supposed to "verify" the cardholder had the card in his / her hand during the checkout process. The card associations told the merchants not to store this number anywhere on their systems, to help prevent hackers from obtaining this number. Unfortunately within a few months, these numbers were available along with the credit card numbers and billing ZIP code.
Chances are also pretty good that you, as a merchant, are already using and relying on this feature without even knowing it - just like Vetting the Transaction - Address Verification Service (AVS).
However, electronic payment gateways should still support this feature and should be used when vetting the transaction. If the numbers do not match, a closer look should be made (Vetting the Transaction - More Options). If this feature is not offered by the electronic payment gateway consider Changing Merchant Account Providers and / or electronic payment gateways.
The Quantum Gateway is one of the electronic payment gateways that supports and recommends that Internet and Telephone merchants use the CVV2 / CVC2 / CID (Card Verification Value - Card Verification Code - Card Identification Number to help prevent fraudulent transactions and chargebacks.
So what's the difference between Card Verification Value (CVV), Card Verification Value 2 (CVV2), Card Verification Code (CVC), Card Verification Code 2 (CVC2), and Card Identification Number (CID)? To one extent, nothing - especially when it comes to American Express and Discover Card - these card associations rely on the CID.
The card association, Visa, uses this term to identify the 3-digit number, usually found on the back of the card. Visa refers to this 3-digit number on swiped transactions, when the data is collected via a POS terminal. Visa refers to this 3-digit as CVV2 when it is used in card-not-present environments, i.e. Internet or Telephone transactions (Vetting the Transaction - Card Verification Value or Card Identification Number).
MasterCard (and Cirrus / Maestro branded cards) use this term to refer to the 3-digit number. Just like Visa, CVC (also known as CVC1) is stored on the magnetic stripe and is read when a merchant swipes the card. CVC2 is the 3-digit number usually found on the back of the MasterCard on the signature panel and is usually used to help prevent fraudulent transactions on Internet and Telephone transactions (Vetting the Transaction - Card Verification Value or Card Identification Number).
Discover Card and American Express refer to this number as a CID. Of course, it cannot be as simple as that.
American Express uses a 4-digit number, found on the front of the American Express card and printed above the account number (not below). American Express might also refer to this number as 4DBC.
The CID on the Discover Card is pretty much the same as Visa / MasterCard - it is a 3-digit number found on the back of the card.
One thing to consider though - never store this variable in your database in no way, shape, or form. You could end up on the MATCH / TMF List.
One of the better known services is MaxMind. They offer Geographical IP address location checking. This service looks at the IP address of the transaction to see if it matches the billing ZIP code (or how far away it might be). If the IP address does not match the country, the transaction might be fraudulent.
Of course, there is always a reason the country might not match the billing ZIP code. For example, a United States consumer is on vacation in Mexico for the winter. He places an order on your website and the GeoIP comes back as mismatched. Even if the product is less than $10.00, the merchant still needs to scrub the transaction even more. The merchant is subject is a chargeback (Fraud Codes for Chargebacks) while also increasing his Chargeback Ratio.
The Quantum Gateway is one of the few electronic payment gateways offering the MaxMind GeoIP built into the system - helping to decrease development time. It also does not charge for this feature, saving the merchant even more money while comparing these services to the "big boys".
Calling your customer to verify the transaction is another way to help prevent fraudulent transactions: Reducing Fraudulent Transactions in ECommerce with the Quantum Gateway, Some Ways to Help Internet Merchants Reduce Fraud and Chargebacks, Preventing Online Fraud, and Fighting Fraud in your E-Commerce Store. However, this takes time and sometimes a lot more time than the product is worth, but you want to do everything you can to prevent a chargeback (Chargebacks Are Not Worth Fighting). The customer might not be at home when you call or the product might be a gift for a member of the household and you might ruin the surprise if you speak with the wrong individual. Plus, who is to say you will actually speak to the cardholder.
There are some products available to merchants like Prove Out, Telesign, Onverify, Phone Confirm, and Telephone Verification from MaxMind. These products can help verify the phone number and they will usually take into account the area code and the billing address to see how close these two numbers are. For example, if the billing ZIP code is 90210 and the area code is 212, the merchant might want to look harder at this transaction to see why these two numbers are about 2,800 miles away.
Unfortunately, most of these products have to be added to the checkout process and this can cause problems at times. The response from the product might lag, causing the customer to re-enter some or all of their checkout information again. The merchant might lose the sale.
Fortunately, the Quantum Gateway took this into account when building its product. They added Dial Verify right into the electronic payment gateway - allowing the gateway to handle the process. This also reduces the amount of development the merchant needs to add as well.
All these extra security features can be considered to fraud and chargeback prevention tools that the Fortune 500 companies (the "big boys") are using at no extra costs to the merchant.
Address Verification Service, also known as AVS, is one of the primary tools used to help verify the identity of the cardholder. The electronic payment gateway will usually do this vetting process itself - and some electronic payment gateway charge a fee for this service. Some merchant account providers will downgrade the transaction to non-qualified if AVS is not done (or cannot be done).
There is really no reason not to do AVS on the transaction and most merchant account providers will not support the transaction if AVS can be done on the transaction. If this feature is not offered by the electronic payment gateway, consider Changing Merchant Account Providers and / or electronic payment gateways (Quantum Gateway supports Address Verification Service (AVS). The merchant account provider might be charging you more for each transaction if an AVS response is not posted on the transaction.
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