ECommerce Risk Awareness

Fraudulent card payment transactions and data security breaches can be very costly for eCommerce merchants and addressing them requires a clear understanding of the risks associated with doing business over the internet. Your entire staff should be well educated and understand the impact of fraudulent transactions and chargebacks on your organization's bottom line. Your personnel should also be well trained in your organization's risk management policies and procedures. The following best practices can be used as the foundation of your risk mitigation policies.

• Understand eCommerce Transaction Risk. You should educate yourself on the variety of risk factors involved in processing payments online. The more you know about it, the better prepared you will be to devise your operational policies, fraud prevention tools and security controls.
• Understand the Chargeback Process. The importance of understanding chargebacks and developing procedures to protect your business from them cannot be overstated. Chargebacks are not only costly and time consuming but, if they exceed 1% of the total number of your sales transaction, your merchant account service may be closed. The following suggestions will help you keep chargebacks under control:
  • Work with your payment processing service provider to develop protective mechanisms against charged-back transactions. Make sure you have a complete understanding of:
    • transaction authorization requirements;
    • expired authorization rules;
    • time limits for fulfilling copy requests;
    • cardholder disputes;
    • fraudulent use of account numbers.
  • Understand your rights and resubmit transactions that have been charged-back to you for fraud reasons.
  • Utilize MasterCard SecureCode and Verified by Visa to reduce your risk exposure.
• Train your Staff in eCommerce Risk Management. If you do not train your staff to be able to understand and implement your risk management procedures, your efforts will not be effective and you risk mitigation efforts will fail. Your staff should:
  • Have a complete understanding of eCommerce security issues and fraud risk.
  • Understand the chargeback rules in regards to eCommerce transactions.
  • Be capable of implementing your risk management policies.

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