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How to Avoid Online Payment Fraud?

Last editedMar 20222 min read

As technology advances, more and more customers are choosing to shop online rather than going to in-person stores. Thanks to convenient payment solutions and e-commerce websites, customers are able to shop more quickly and more easily than they have ever done in the past. However, with this rise of e-commerce, there has also been an increase in online payment fraud statistics.

As online businesses have to process sensitive details such as payment information or customers’ personal information, it’s essential to have the right fraud prevention programme in place. This allows you to keep information safe, protecting both you and your customers. Keep reading to find out more about the steps you should take for online payment fraud prevention.

What is online payment fraud?

Before talking about the ways that you can ensure online payment fraud prevention, it’s important to first clarify what is meant by this and the different ways in which it can occur. Essentially, it refers to situations in which someone makes an unauthorised payment, usually by stealing someone else’s card payment details.

Transactions can fall into two categories: card present, and card not present. Card present refers to situations in which the card is physically used by the customer at a POS system, such as in a restaurant or physical store. Card not present refers to transactions where card details are used, but there is no physical use of the card, such as online or over-the-phone transactions.

These card not present payments are a target for online fraudsters, as they only need card details to carry out a fraudulent transaction. This also makes it much harder for you to verify the identity of the customer, and is a key reason why online payment fraud statistics are rising.

Address verification services

One of the most important steps that you can take to provide secure payment services is using an address verification service. This method of online payment fraud detection checks the address given by the customer against the one that the issuing bank has on file.

The address verification service will then provide the seller with a code that allows you to see whether there is a full address match. If there are any issues with this, then you can carry out further identity checks or even reject the payment.

Using card verification values

Another good way to carry out fraud detection in online payments is by using the card verification value, which is the three-digit number that you will find on the back of any credit or debit card. Since this number is only available on the physical card, it helps to prevent fraud in card not present payments. Make sure that your payment gateway uses a CVV filter to fight fraud and reduce potential chargebacks.

GoCardless and online payment fraud detection

GoCardless takes security seriously, especially when it comes to making and receiving payments. Some of the steps that are used to protect customer and seller information are as follows:

  • Data is protected under some of the most stringent regulations in the world, based on the EU General Data Protection Regulation, which also meets the standards of Australian Privacy Principles

  • Multiple firewalls are used to separate the financial data service from the application server.

  • All access to the Direct Debit system is provided by major banks who have approved the systems.

  • Client-server communication is encrypted using 256-bit SSL. For context, banking systems require just 128-bit SSL.

Using all of these measures, GoCardless is very efficient at fraud detection in online payments. This means that both you and your customers can rest easy in the knowledge that your sensitive data is protected from the dangers of online fraud.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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