If you are processing payments online, you are probably aware of the risks associated with online payments. Just because someone can enter a credit card number to make a purchase does not make them the card owner.
When operating an online business, you run the risk of processing fraudulent transactions. Fraudulent transactions can have detrimental effects on your business, most commonly in the form of chargebacks.
If a customer notices a transaction on their credit card statement that they did not initiate, they will inform their bank and get that money back. Not only will you lose out on the sale, but you will also be hit with a chargeback fee. According to a study by Chargeback 911, fraud costs the average merchant 1.47% of their total revenue each year.
To protect your business, you need to authenticate your transactions to make sure the cardholder is who they say they are. So where do you start?
Enter AVS and CVV
Address Verification System (AVS) is one of the most simple and effective ways you can ensure a customer is, in fact, the cardholder. AVS checks to see if the billing address of the customer matches the address on file with the credit card issuing bank. If the two don't match up, that's a red flag that the card might be compromised.
You can take AVS one step further and require the customer to add their phone number as part of the verification process. Again, if the phone number does not match the one on file with the credit issuer, that's another red flag.
CVV (Credit Verification Value), CVD, or CVV2 is a security feature that will soon be mandatory for all card-not-present transactions. It is the 3-4 digit number that can be found on the back of the Visa, MasterCard, and Discover card, or the 4 digit code on the front of an American Express card. The CVV ensures the card is actually on hand when the purchase is made.
CVV also has a unique security feature; the number cannot be stored after a transaction is authenticated. If a database of transactions is compromised, the CVV will still be safe, making the stolen cards less useful to fraudsters.
Why you need both
On their own AVS and CVV are reasonably effective, but together, they can make the difference between a chargeback and a legitimate transaction. As you might have guessed, the more security you can offer at your checkout, the less chance you have to fall victim to fraud.
Increased security measures for your online business will allow you to reject transactions that may look suspicious. 30% of chargebacks are a result of a purchase made with a stolen credit card. Incorporating AVS and CVV into your online store will help reduce your risk of chargebacks from fraudulent transactions.
Integrating AVS and CVV in your solution
To integrate AVS and CVV in your online store, you will need to partner with a payments provider that offers both of these features. With Bambora, AVS and CVV come standard with any account type. You also gain access to secure servers that store your customer's sensitive payment information.
Bambora offers a simple solution called Checkout that looks like:
Checkout has AVS and CVV available and automatically encrypts all the customer's sensitive data using tokenization. To take it one step further you can embed a customized payment form using Custom Checkout, so your customers feel safe knowing they are still on your site.
As mentioned above, AVS and CVV should come standard with any account type. They are the basic fraud tools that can help save your online business unnecessary time and resources being spent fighting chargebacks from fraudulent transactions.
Partnering with a payment provider like Bambora not only gives you access to AVS and CVV; you also gain access to an entire suite of payment options such as digital wallets that can help increase your conversion rate.
No matter what your payment needs are, Bambora has a full suite of payment options to grow your business. For more information, click here.