Written By: Alina Shams, Mastercard Canada

Every customer matters when you are a small business. Accepting all forms of payment, including cash, credit, debit and prepaid cards, can help grow your business. While each payment option has its advantages and disadvantages, only electronic payments can instantly connect you to customers wherever and whenever they want to make purchases.

Your customers get more when you accept electronic payment cards – greater flexibility, security and confidence. But as a small business owner, you get more too. Through electronic payments, you have access to customers online, over the phone and can enable them to set up recurring payments. Electronic payment networks like Mastercard help small businesses compete for customers around the world by providing convenience in the store and secure access to goods and services from their homes.

However, you must know and understand all the tools available to fight fraud. Electronic payment card technology offers protection against fraud, allowing small businesses to eliminate chargebacks, get the lowest processing rates and maintain their reputation by avoiding fraud. Through the partnership of card networks, small businesses, customer banks and the payments processors, fraud can be predicted, detected, resolved and prevented. An open line of communication between the partners is important.

Read on for Mastercard’s advice on preventing, predicting, detecting and resolving fraud.

Fraud Prevention

Prevent fraud by taking some of the initiatives below. When accepting payments in a face-to-face setting check the security features on the physical card. Some of the things you can look for are:

  • Embossed numbers on the front. The numbers should be clear and uniform in size and spacing and extend into the hologram.
  • Examine the hologram. It is usually on the front of a payment card, either above or below the brand mark.
  • Become familiar with new card designs. For example, some new card designs might have the hologram on the back of the card instead of the front.
  • Look at the magnetic stripe. The stripe on the back of the card should appear smooth and straight, with no signs of tampering.
  • Examine the expiration date. The card should not be accepted after the last day of the “valid through” date indicated on the card.
  • Is the customer using the card the true cardholder? Electronic payment cards are non-transferable. Be observant of customer behaviour.

When accepting payments in a setting where you can’t check the physical card (e-commerce, mail order/telephone order or recurring payment), some of the things you can look for are:

  • Use the Address Verification Service (AVS) to confirm postal code or full address of a cardholder.
  • Confirm the Card Verification Code (CVC) to make sure customers making online or phone purchases have the card in hand.
  • Use Mastercard SecureCode to authenticate the customer and secure your transaction protecting you against fraud and chargebacks.

It’s also important to keep up with new technologies like Masterpass, embedded chips and mobile payment platforms. Keeping up with the latest terminal technology—like contactless and mobile payments—means that you can offer your customers the safest and most convenient payment options. The latest in technology allows you to be compliant with all the latest security regulations while providing the best customer service.

Fraud Prediction

Fraud can be predicted through awareness and knowing your customers. Use common sense awareness, observe customer behaviour to ensure purchase patterns are normal:

  • Always double check anything unusual. Call or e-mail back the customer before shipping an unusual or large order.
  • Learn more about fraud detection services offered by electronic payments networks such as Mastercard Expert Monitoring Service (EMS) product suite.

Beware of taking shortcuts at the register, on the phone or online. Cards work so fast and so often that it’s easy for employees to skip a question, grow impatient with an approval delay or fail to check a card security feature. In rushing to process a transaction, you may miss a crucial detail that could’ve prevented fraud. Missing pieces of transaction information can cost you.

Fraud Detection

Electronic payment networks offer a wide variety of services that can aid you in detecting fraud before it happens.

  • Early warnings: Electronic payment networks such as Mastercard offer early warnings identifying transactions occurring on accounts with fraud indicators.
  • Monitoring: Electronic payment networks monitor chargeback levels on a monthly basis. Mastercard’s Excessive Chargeback Program (ECP) monitors when your business has exceeded or is likely exceed monthly chargeback thresholds.

Let the security of card technology work for you. When transactions are denied or flagged as problematic, trust those warnings and communicate with the card networks to confirm before allowing customers to receive goods or services.

Fraud Resolution

It is important to know your rights and responsibilities in case of fraud to minimize your liability. Follow the tips below to ensure due process.

  • To reduce damage after fraud is discovered, call the payment network or the cardholder’s issuing bank. The bank will communicate directly with the actual cardholder and open a fraud protection investigation.
  • Follow all steps recommended by your Acquirer/Processor for ‘card present’ transactions, to minimize your liability.
  • Know your rights. When a customer’s bank issues a chargeback against your account, make sure your processor or bank advocates for your rights and contests them when appropriate.

Make sure your Acquirer/ Processor is providing you with the opportunity to resolve disputes if possible and not just passing it on to you.

Electronic payment technology gives you powerful tools to prevent fraud, protect profits and guard against higher processor rates. Processors typically charge lower rates for transactions and businesses with lower fraud risks. To ensure you are protecting yourself and your business to the fullest extent, don’t take shortcuts on security, update your technology, know the services available to you and understand your merchant rights. To learn more about fraud and security, visit https://www.masteryourcard.org/canada/.

About Master Your Card:
Master Your Card is a community empowerment initiative by MasterCard. It is a global financial education initiative with a local focus. The program works with various community partners to deliver customized financial education programming to small businesses and consumers.

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