My Merchant Account Blog

Advanced Fraud Controls

Thursday, September 29, 2011

More Details Coming Soon

Basic Fraud Controls

Monday, September 19, 2011

One of the first things a merchant can do to prevent credit card fraud is confirm the identity of the cardholder. When the card is present, this can easily be done by requesting a photo i.d. with a signature on it, such as a driver’s license or a government-issued card.

In situations when the card is not present, such as an over-the-phone or online transaction, there are two basic steps merchants should take to make sure the customer is legitimate: running an address verification (AVS) and obtaining the card’s verification code. 

Address verification is run through the payment gateway; it verifies the cardholder’s address through a series of steps.  The cardholder’s billing address is sent to the payment processor for verification, who then passes the address information to the issuing bank.  The bank matches the information with the address information they have on file for the card. Although this is a great system for preventing fraud, it is not perfect; it works only for United States addresses.

Card verification codes are the next line of defense for card-not-present transactions.  Visa refers to this code as a card verification value (CVV), Mastercard calls it a card validation code (CVC) and American Express and Discover call it card id (CID). The code is a three- or four-digit security code printed on the back of credit cards, typically at the end of the signature section.  The verification code program helps validate a genuine card is being used for the transaction and works similarly to address verification.

See also: Card Verification Value - Card Verification Code - Card Identification Number

Tokenization

Saturday, September 10, 2011

A process for protecting card information by which the data are replaced with an alpha-numeric substitute ("token") for their storage in a POS system. The token can be used to identify the purchaser for chargebacks or other post-transaction issues but is useless if stolen.

Terminal

Wednesday, September 07, 2011

A POS device, usually with a small display monitor and keyboard, connecting to the Visa and MasterCard payment network and/or to a proprietary network that authorizes payment card transactions and transmits card data to a receiving institution. is a computerized replacement for a cash register. Much more complex than the cash registers of even just a few years ago, the POS system can include the ability to record and track customer orders, process credit and debit cards, connect to other systems in a network, and manage inventory.

Tamper Resistant Security Module

Thursday, September 01, 2011

A payment acceptance device with built-in physical protection to prevent tampering, such as the placement of a skimming device on the module.