The potential market for internet trading is vast and is a method of trading which any business would want to consider seriously. However, before you go online, you should ensure that you are aware of the risks involved in internet trading, your responsibilities and the measures you can implement to reduce the risk to your business.
So why is fraud such an issue?
Internet trading is regarded by the bodies which regulate credit and debit card trade as very similar to ordering goods by telephone or mail order because neither the cardholder nor the card are present when the order is placed. This means that there is no signature or a pin number that can be checked to confirm the identity of the cardholder and authenticity of the card making internet transactions particularly susceptible to certain types of fraud, even when a card has not been stolen. For example, a valid card number may be used without the consent of the cardholder, or the actual cardholder may claim that they did not receive the goods that were ordered, both of which could lead to the payment being disputed with the cardholder's issuer and result in a chargeback.
What are chargebacks, and why do they happen?
When an order is placed over the internet it can be difficult to prove that a valid order was placed because the cardholder does not give a physical signature or enter a pin number to confirm the transaction. If a dispute arises you should respond promptly to any requests for information, however, if you are unable to satisfy the card issuing bank that the order was properly placed and fulfilled, then they may decide to chargeback the transaction. This means that the card in question will be credited and your merchant account will be debited to the value of the disputed transaction.
Generally, chargebacks can occur up to six months after the transaction date, but this period can be extended in certain circumstances, such as where goods or services are covered by a guarantee period, or where the period of delivery is uncertain (such as an ongoing contract for services). Ultimately, there is no guarantee that an authorised transaction may not prove fraudulent, and will not be charged back.
Fighting Fraud - what can I do to reduce the risk?
We take the risk of fraud on the internet very seriously. Our payment system uses state of the art encryption techniques and supports the industry leading anti-fraud systems provided by both MasterCard and Visa. In addition we have developed our own anti-fraud software which provides you with a sophisticated detection system designed to identify potentially fraudulent transactions.
To reduce the risk of fraud to your business, we recommend that you carefully review each order before you decide whether or not to ship the goods. To assist you when making the final decision to fulfil an order we provide you with the transaction details and the results of the anti-fraud checks. You should choose how best to use our anti-fraud tools to suit your business needs and also consider revising your trading practices to include additional measures, such as further manual checks, where appropriate.