Understanding Card-Not-Present (CNP) Fraud and How to Prevent It

ECommerce and mobile shopping continue to grow every year. Unfortunately, this convenience comes with a cost, in the form of card-not-present (CNP) fraud. With no physical payment card presented, hackers who gain access to card information can pose as the cardholder and make purchases. This problem is surging and will cost retailers an estimated $130 billion by 2023. Still, there are ways for you to protect yourself against unauthorized CNP transactions. Start with these steps to prevent CNP fraud.

Collect More Data

When you take payments, you should require verifying information for the card. This includes the security code on the back of the card, the cardholder billing address, the shipping address, the IP address of the device used to shop, and the cardholder's phone number. The more information you gather, the more certainty you can have in verifying that the person making a purchase is the person who owns the card. This protects you against chargebacks from customers who claim not to be responsible for payments made.

Track Shopping Patterns

As you collect data on your customers, you can start to recognize patterns in their shopping: how often they purchase, how large their purchases tend to be, when they tend to purchase, and other information that can help you. This isn't to say that any purchase that breaks with previous behavior should be automatically denied. Rather, purchasing behavior that goes against a customer's typical shopping behavior should raise your antennae for potential extra scrutiny on a purchase.

Request Extra Authentication

That extra scrutiny should come with additional information you require for a purchase. A customer making a large purchase or sending it to a different address from the usual may raise red flags that make a phone call or other information gathering necessary before you confirm a purchase. These steps may not prevent every instance of CNP fraud, but they can go a long way toward deterring data thieves.

Use Tokenization Technology

Tokenization is the process of protecting sensitive data by replacing it with a unique identification symbol or token that retains all the essential data without compromising its security. It is very useful for processing card-not-present transactions safely & securely, reducing the risk of having sensitive data fall into the wrong hands.

Boost Your Security

PCI compliance should be a minimum standard for your eCommerce site. If you focus on protecting customer data, you not only protect those customers, but you also reduce the availability of that information to those who might commit CNP fraud. As the world shrinks around you, protecting against overall fraud is something everyone should take seriously. With Nuvei, we recognize the need for the highest security available to protect you and your customers. Our technology and expert staff can help you reduce risk, chargebacks and simplify PCI DSS compliance.

Unite Consulting & Technology

These steps require a level of experience and expertise in payment processing. Rather than try to go in as a lone wolf to prevent CNP fraud, work with a processing partner that has the tools in place to identify and analyze patterns and suspicious behavior. If you prepare upfront with the right partner, you can both prevent more fraud and focus on your business. At Nuvei, we help you reduce risk, chargebacks and simplify PCI compliance by uniting payment consulting and payment technology.

No set of tools is 100% effective in preventing CNP fraud. When you use the available options, though, you both make yourself a harder target and catch more of the instances that bad actors attempt. Go in with a game plan to protect your eCommerce revenue.

Understanding Card-Not-Present (CNP) Fraud and How to Prevent It

About the Author

Shannon LeDuff, SVP, Digital Payments

Shannon is responsible for Nuvei's North American eCommerce strategy and implementation. He heads up direct eCommerce sales, ISV-Payfac sales and card not present Partner channels.

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