CNP Fraud Could Cost Merchants Millions

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Because EMV will decrease fraud for retailers, many expect that hackers and fraudsters will instead turn to online businesses, driving up CNP fraud.

CNP Fraud

With the transition to EMV already in full swing, experts predict that card-not-present merchants could experience higher fraud rates moving forward. Because EMV only decreases fraud for retailers, many expect that hackers and fraudsters will instead turn to online businesses, driving up CNP fraud. With CNP merchants already paying incredible amounts of money per year fighting and preventing credit card fraud, there is cause for concern in light of the growing implementation of EMV.

CNP Fraud By the Numbers

With EMV set to become the norm in the United States, retail merchants will likely see a decrease in risk for fraud at their stores. However, this could put some more pressure on e-commerce merchants, with criminals likely to attack their businesses instead.

CardNotPresent.com reports that while there is a difference in which CNP merchants pay the most for fraud protection, the numbers represent a massive problem for the industry. CNP merchants who sell only digital goods on their websites spend an average of $10 million per year fighting fraud and chargebacks. This figure accounts for roughly 20% of their operating budgets, which limits their ability to grow as a business. Merchants who sell physical goods spend around $1.8 million preventing fraud. While this number may seem significantly lower, it still makes up about 14% of their operating budgets.

The bad news is that these costs could continue to rise. Fraudsters who target the more vulnerable CNP businesses could cause merchants to spend even more on fraud prevention, seriously constricting their ability to spend on money on other things.

How to Fight Fraud Affordably

The reality is that CNP fraud is a serious problem, and one that will likely become more significant in the next year or so. The only way to fight fraud effectively and affordably is to be proactive.

All CNP merchants should be PCI compliant, regardless of what kind of goods you sell. Practicing basic PCI-approved methods to counter fraud can help save you from spending more in the long run. If your business isn’t currently PCI compliant, the first thing you should do is bring it up to speed with current guidelines.

Selling goods online is a risk for both you and your customers, so protect your website using SSL certificates. These can help secure your webpages that house sensitive data, and prevent hackers or fraudsters from gaining access to credit card numbers. Once installed, these certificates require little to no maintenance and can proactively fight back against fraud.

If all else fails, look at the root of the problem. Processing credit card payments automatically makes you a target, as some hackers are able to exploit millions of credit card numbers if they breach your database. It might be wise to change the way you accept payments entirely, and find a new payment processing method. There are alternatives to credit card processing, like ACH processing, that may offer a safer solution. Get in touch with a trusted, knowledgeable merchant account provider to see if you qualify for an option like this.  

Are You Concerned About CNP Fraud?

What precautions are you taking for your online business? We would like to know. Please leave us a comment below.

About the Author

Dylan Freni is a copywriter at Instabill. He writes articles for the company’s nine websites, including three articles per week for the Instabill blog. Frequent topics include merchant services, payments industry news, e-commerce tips, and merchant account how-tos.


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Oct 13, 2015 Category: General Posted by: Marketing
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