Does Your Processor Offer Credit Card Fraud Detection?

Credit card fraud detection is vital for your business. Discover more…

A growing number of small businesses are being targeted by fraudsters. Such incidents can often lead to major consequences. That’s why Acumen Connections is prioritizing credit card fraud detection to give small business owners like you the peace of mind you deserve.

Statistics suggest that credit card fraud increases every year. You can never be too careful, especially as a small business because you have so much more to lose as opposed to a bigger corporation. As your payment provider, we take steps towards credit card fraud detection to keep businesses safe.

Did you know that the United States accounts for 49% of global credit card fraud? In this article, we will discuss credit card fraud and credit card fraud detection along with high-ticket items and solutions to combat fraud.

What is credit card fraud?

Credit card fraud is a type of fraud that involves bad actors taking over a credit card or credit card credentials without the cardholder’s consent or knowledge, to make unauthorized transactions. More than 150 million Americans have fallen prey to credit card fraud.

Speaking of cardholders, the age range of 30-39 has the most while the ages of 80 and above have the least reports of credit card fraud.

As a business, you must take fraud concerns seriously because 48% of cardholders believe that merchants should be responsible for protecting them from credit card fraud. They trust you and in business, that is priceless.

What is credit card fraud detection?

Credit card fraud detection involves ways to identify, manage, and prevent credit card fraud.

These methods are usually digital. For instance, some financial institutes flag spending behaviors that aren’t typical for cardholders. Atypical activities could be too many transactions in a short amount of time, a spike in spending, larger than usual purchases, unexpected locations, unusual times etc. 

Why is Fraud Increasing?

By 2025, credit card fraud in the US is expected to cost more than $12.5 billion. There are a few reasons why fraud numbers are increasing. Let’s take a look:

1. Technological advancements

Technology is supposed to help us and simply our lives. It sure does that, but it also offers fraudsters more tools to commit unauthorized transactions. They’re getting smarter and better at skirting detection. Having access to more sophisticated software and tactics empowers these fraudsters to be more prevalent. The worldwide web is limitless and opens room for miscreants to conduct fraudulent transactions which invariably compels us to elevate credit card fraud detection and protection.

2. Loopholes in the law

When fraud occurs across international borders, there is some confusion regarding jurisdiction. Issues such as data security and other regulations may not be the same in all countries. 18% of countries have no regulations for data security and protection. There are other grey areas that exist, and a lot of fraudsters rely on them to make transactions pretending to be cardholders.

3. Consumer and business carelessness

Let’s face it. We’ve all been careless at some point in our lives. In fact, 25% of adult internet users admit to sharing sensitive information online. Also, sometimes cardholders share card information with friends and family. Violation of trust among loved ones isn’t unheard of and can cost victims a pretty penny. There are adults who don’t follow online safety and are vulnerable to password leaks making credit card fraud detection a necessity.  

Sometimes, businesses may not have measures set in place to combat employee fraud. There are instances of businesses failing to secure their websites. As a business, you must stay ahead in your cybersecurity efforts and maintain PCI compliance.

4. More digital platforms

As cardholders get on a new platform, so do fraudsters. In recent years, there has been a boom in several social media platforms, dating apps, rideshare apps, food and grocery delivery apps etc. Cardholders can now be targeted across mediums. At the time of writing this article, American Express shared that some cardholders’ account information may have recently been breached in a third-party hacking. It’s not unlikely that the card information will be used to attempt credit card fraud. That’s why businesses need credit card fraud detection to avoid fraudulent transactions.

5. Rapid e-commerce growth

The global e-commerce market is projected to hit $2.5 billion this year. People across the world are shopping online and carrying out card-not-present transactions. As a result, there is more opportunity for bad actors to steal card information using various tactics. If you sell online, you want a payment processor that is all about credit card fraud detection.

6. Widespread digital payments and banking

In addition to online payments, people today use digital wallets like PayPal or Venmo for day-to-day transactions. These platforms are safe however, cardholders now have another set of login credentials to keep safe from prying eyes. Losing one’s smartphone even for a few minutes could result in someone getting this data.  

Also, some banks are completely online. As a result, transactions are happening virtually and not in person. This creates room for credit card fraud as it might be more difficult to verify identities. 

7. Post pandemic blues

The pandemic changed so much for everyone. It changed how we do business and how we go through life. Plenty of miscreants seized the opportunity to target cardholders when they were slowly transitioning into a more digital lifestyle. Although we’re no longer on lockdown, Covid-19 did expose our vulnerabilities and there’s always a lurker waiting for the right moment to strike. That is why credit card fraud detection is so important.

Fraud detection solutions

Credit card fraud detection is essential to keep businesses and cardholders safe. It can be enforced by a few different methods. Here are some solutions our merchants have access to:

1.  High-Ticket Items

Every now and then we get questions about high ticket items. A high-ticket item is any sale that is much larger than your usual sales. Your processor might notice transactions where cardholders are buying more than usual, either by price or quantity. There are several reasons a high-ticket sale could happen. A shopper could be using a stolen credit card, a number might have accidentally been typed wrong, or you could have had an incredible sale.

Every payment processor keeps an eye out for suspicious high-ticket items. When they see one, they put a temporary pause on the transaction until it can be verified. It helps protect your business and our business. We want to make sure that nothing is incorrect. We want to make sure you will not be charged back in such a way that may devastate your company. We get that it is annoying when a pause is imposed on a high-ticket item, but it is done to thwart any potential wrongdoing.

For more information on high-ticket items, check out our blog or watch this video:

There is good news. By working with Acumen Connections, together, we can help prevent fraudulent transactions, charges, and chargebacks from happening. Together, we can even help your business by ensuring that the charge is not completed. We can do these things with a high-ticket item.

2. Kount

A game-changer in credit card fraud detection, Kount is a tool that offers fraud protection against card-not-present transactions across the board. These could be mobile, e-commerce, or simply any transaction where the card is not physically present. Kount can approve or deny transactions in case of fraud suspicion. Additionally, it can help with chargebacks and disputes. 

Kount does a lot to streamline protection of your business, including:

• Avoiding criminal chargebacks  
• Decreasing fraud  
• Making it easy to add to your company 
• Working with supported platforms like Shopify, Magento, CommerceCloud

Pricing depends on transaction volume. If you’re interested in adding Kount, or learning more about it, give our team a call today at (316) 265-4477.

Other tools

Our partners also help monitor credit card fraud. Experts in the industry with decades of experience are trained to detect fraudulent transactions and behaviors across platforms. In addition to high-ticket items and offering Kount, our merchants with an Acumen Connections payment gateway have safety features such as tokenization when processing online payments.

Don’t forget the power of human detection as well! If a transaction seems suspicious, you don’t have to accept it. In addition, with online or ecommerce purchases, they’re considered a card not present transaction, and there’s a higher risk with these online sales than in-person sales. That’s why businesses ask shoppers to confirm their address, CVV, and card expiration date when making a payment like this.

How is credit card fraud detection different than other kinds of fraud detection?

Credit card fraud detection is different than other types of fraud detection in a few ways:

• Relies heavily on electronic and digital fund transfers and payments. 
• Focuses solely on transactions made via credit cards. 
• Behavioral patterns of cardholders are used to flag unusual or suspicious account activity. 
• Needs quick monitoring and action to stop financial losses. 
• May require distinguishing between a fraud attempt and a legitimate transaction that was somehow out of the typical parameters. 

Credit card fraud detection security

There are special tools that conduct credit card fraud detection on both sides of the equation – businesses and cardholders.

Cardholder credit card fraud detection security

Cardholders can access tools like 24/7 fraud protection offered by their card providers, magnetic stripe cards that protect them from card skimmers, geolocation that compares a cardholder’s phone location with place of a transaction, requiring a PIN, and more. The median charge of credit card fraud is $79. Cardholders should monitor their credit card statements to rule out suspicious charges.

Merchants credit card fraud detection security

Merchants like you can practice credit card fraud detection using tools like AVS (Address Verification Service) authentication which compares a billing address with one the card provider has on file. There is KBA (Knowledge-Based Authentication) that compares information provided during transactions with information on file to verify identity. Lastly, merchants can use KYC (Know Your Customer) alerts to verify a customer’s identity using facial recognition and other forms of biometric information. 

Merchants can also utilize tools such as artificial Intelligence (AI). AI is ground-breaking in so many different sectors and credit card fraud detection is no exception. AI has revolutionized how businesses can effectively keep fraud at bay and protect themselves and cardholders.  

Credit card fraud detection can be achieved by additional methods like biometrics, voice recognition, and more.

What we can do for you

At Acumen Connections, we take credit card fraud detection very seriously. That is why we have a team of trained professionals to spot a potential threat and stop it in its tracks. Our merchants have the option to avail a potent tool for advanced fraud protection. In addition, we consistently share resources and business tips to empower small businesses against fraudulent transactions. We ensure you stay PCI compliant and conduct business in the most viable way. 

We wanted to provide insights on credit card fraud detection for our customers. We want cardholders to be informed about growing fraudulent transactions and assure them of our credit card fraud detection efforts. Together, we can help prevent credit card fraud and identity theft. Together, we can help protect your company.