E-commerce sales are growing exponentially, with no sign of slowing down. Unfortunately, credit card fraud attempts in online shopping transactions are also on the rise.
Credit card fraud is the number one type of fraud in the United States, according to a 2020 Federal Trade Commission Report. A specific type of credit card fraud referred to as card-not-present (CNP) is being committed on a momentous scale.
Online payment fraud is a major issue for any business with an e-commerce component and an online shopping cart. But it’s especially serious for CBD shops and other high-risk businesses that aren’t able to utilize the payment solutions and services typically provided by banks and traditional financial institutions.
Identity thieves and cybercriminals target high-risk businesses because they know that many of these merchants don’t have the optimal tools, technology and systems for payment processing and have not been properly equipped with the advanced cybersecurity needed to protect their online shopping carts from payment fraud.
However, with some common-sense awareness and a few simple security measures to ensure and protect card processing and payment gateways, merchants can minimize the risk to their business and their customers.
Benefits of e-commerce for high-risk businesses
Some CBD shops and other merchants have chosen to avoid the e-commerce merchant route due to cybersecurity concerns and the added time, effort and cost of setting up online payment functionality. But in today’s advanced technological and highly competitive marketplace, online shopping carts and credit card processing solutions are a necessity.
Consumers not only like the convenience of being able to shop for and purchase products online, but also expect to be able to do so with ease. Additionally, they want a positive experience from the merchants with whom they choose to do business. Offering an online shopping cart with secure payment solutions grants you the opportunity to significantly grow your customer base, as well as deliver a positive – rather than complicated or risky – experience to the customer.
Types of online payment fraud
Of course, the concern for online payment fraud and related cybercrime is still prevalent. But being aware of the various types of fraud can help you better prepare and protect your shopping cart platform.
For starters, there is simple credit card theft. This occurs when hackers, scammers and cybercriminals manage to obtain another individual’s credit card information. Card testing is another type of fraud in which criminals will attempt to test whether a card has already been reported stolen by trying to make a small purchase or many small purchases.
And then there is package interception and redirection. This describes the act of fraudsters purchasing items with stolen credit card information and intercepting them before they are delivered to the victim’s address.
What can businesses do to protect themselves?
Many simple cybersecurity protocols can deter thieves, ensure compliance and enable you to provide better customer service. Start by using an address verification service to validate the address and to require credit card security codes, which thieves often don’t possess. In fact, many thieves will avoid e-commerce merchants and shopping carts that have these security protocols in place, because it’s not worth the hassle.
You can also have your shopping cart platform automatically flag orders that contain quantities or values far beyond the norm. If a particular order appears risky, you can review the order manually and contact the cardholder directly to verify that the transaction is legitimate.
If you discover any fraudulent transactions, you can keep a database of card numbers, email addresses and IP addresses associated with the transaction so that you can prevent subsequent attempts.
A secure payment solution for you
There is another way a merchant can protect their online shopping cart. And that’s FLEX Payment Solutions, a cost-effective and secure option for high-risk businesses, such as CBD and vape shops, that utilize e-commerce.
Recently, one of our clients had more than 6,500 attempts of putting through fraudulent cards, but they all failed because the business had CVV2 required and a CAPTCHA code installed. With our help, they were able to safeguard their business.
While you might be concerned about the costs associated with ensuring better protection for your online shopping cart, the costs of being a victim of cybercrime far outweigh them. Payment fraud can devastate your business and damage the consumer buying experience. FLEX is experienced at working with high-risk businesses and understands their needs. We offer customized payment solutions, excellent customer service and 100% compliance to help you protect e-commerce and grow your business.
To learn more about FLEX Payment Solutions and how we can provide better service and security for your business and your customers, contact us for a free quote.