Card-not-present (CNP) transactions account for nearly 80% of the fraud in the United States today.1 It’s an eye-opening statistic. So how did we get here?
As much as 60% of U.S. payment sales can now be attributed to CNP transactions2, which include e-commerce and phone transactions. Digital transformation was already well underway when the pandemic hit, but there’s no denying that COVID-19 accelerated the trend. Consumers, even those who were less tech-savvy, rapidly migrated to online and mobile channels. Unfortunately, so did fraudsters — as the need for information, but not a physical card, made CNP transactions easier targets.
Types of CNP fraud
The rise in CNP volume has led to the emergence of various forms of criminal attacks, including:
Common fraud risk mitigation tools
Businesses can minimize the risk of CNP fraud by taking a multi-layered approach to security and enabling an array of fraud protection tools, including velocity checks and CVV, address verification service (AVS) and unmatched refunds filters.
Businesses should also consider using Captcha where cardholders must identify a series of distorted letters or numbers to prove they aren’t a bot trying to infiltrate the site or launch an enumeration attack.
For even more fraud protection, on their websites they should implement 3D Secure authentication, which requires cardholders to complete an additional verification step with the card issuer when paying.
Best practices to adopt
Some other recommended best practices for reducing risk include:
We can help
Ultimately, the very best practice is to partner with us on managing the risk associated with your card processing. To ensure you are using the most effective tools and taking all the right steps to protect your transactions, contact your banker, who can refer you to a Merchant Services Specialist. In addition, for the latest guidance on managing card acceptance risk, visit our Merchant Services Client Resources page.
1 “How Financial Institutions Should Combat Fraud in a Post-Pandemic World,” October 2021, https://thefinancialbrand.com/123139/banking-payment-fraud-trend-card-not-present-synthetic-identity/
2 “How Financial Institutions Should Combat Fraud in a Post-Pandemic World,” October 2021, https://thefinancialbrand.com/123139/banking-payment-fraud-trend-card-not-present-synthetic-identity/