As retailers count the cost of credit card fraud after the holiday season, payment services provider PayGate says the new year is a good time for e-commerce businesses to improve their protection.
“International credit card fraud does happen, but the reality is that retailers can protect themselves very effectively by taking a few simple precautions,” says PayGate business development manager Brendon Williamson. “The biggest danger is being so dazzled by the promise of quick returns that you throw common sense out of the window.”
Williamson says that large-scale credit card fraud is often preceded by very clear warning signs.
“One of our clients recently closed their business because of fraud – but it should never have got that far. This retailer refused to sign up for our PayProtector fraud protection service, and then didn’t do basic due diligence on its customers. When you’re importing luxury leather goods to sell in South Africa, and then most of your sales go overseas, alarm bells should ring. Why would anybody wait three weeks and pay extra shipping costs for something they could easily find in their local market? You should know that pot of gold is going to evaporate.”
Another online retailer shipped an order worth R25 000 – much more than the average transaction – to an unverified address in Pretoria, says Williamson, “even though it was bought with a Russian credit card. How much more obvious can a fraud get?”
“These are exactly the kinds of fraud that a system like PayProtector is designed to prevent,” says Williamson. “Basic checks like matching the delivery address to the origin of the credit card make a lot of difference.”
Williamson recommends that retailers who are new to the online environment should limit their sales to South Africa initially. “It takes time to learn who your typical customer is, and what a typical transaction is. Once you have that experience, you’re in a better position to make the judgement calls about which transactions are legitimate.”
It’s also wise not to get too paranoid, adds Williamson. “Keep your focus on serving your legitimate customers well; don’t make them jump through too many security hoops. 80% of your fraud is going to come from 20% of your customers, and those are often easy to identify. Apply common sense, and ask for help when you’re unsure. Every business has risks – success just depends on how well you manage them.”