How to Accept Credit Cards Online the Right Way

There are certain fraud-prevention policies, procedures, guidelines, and solutions for merchants that accept credit cards online. Implementing these tools will assist retailers protect their business from fraud-related issues and chargebacks. E-commerce merchants need to carefully consider designing internal fraud management policies and offering adequate training for their employees.

Authorization Guidelines

Transaction authorization is mandatory every time you accept credit cards online. E-commerce transactions are all zero-floor-limit ones. Authorization approval needs to be obtained prior to any merchandise being shipped or service delivered.

Card Expiration Date

Any time it is possible, e-commerce merchant account holders need to ask their customers for their card's expiration, or "Good Through," date and enter it in their authorization requests.

Entering the date helps issuers to validate that the card and payment are both legitimate. A mail order or e-commerce order featuring an invalid expiration date or lacking one can indicate fraudulent or otherwise unauthorized use.

Card Security Code

Card security code is a three-digit number printed on the back of bank cards (four-digit numbers on front of American Express cards) to help verify that a consumer is in physical possession of a valid card during an order.

Researches have showed that retailers that use security code verification in their authorization requests for non-face-to-face transactions can limit their fraud-related losses and chargebacks.

Address Verification Service (AVS)

The Address Verification Service (AVS) is an strong fraud prevention solution that allows merchants that accept credit cards online and otherwise non-face-to-face to verify a customer's billing address together with the electronic authorization procedure. Reports have showed that fraudsters often do not have any knowledge of the correct billing address for the particular account they are trying to infiltrate. Authenticating the address can, in turn, provide retailers with yet another, and very powerful, key indicator for whether or not a payment is legitimate.

To use AVS, retailers should simply ask card-not-present consumers for their billing address, at the checkout, as it is shown on their monthly credit card statement. This response is then sent, together with the other payment data, for electronic authorization to the issuer. Address verification, as well as security code validation and authorization, are processed simultaneously - in a span of a seconds or two - and the retailer will get an AVS response code with the authorization and security code responses.

Merchants should examine the AVS response code and take adequate action, taking into account all payment characteristics and any other validation information obtained with the authorization response (expiration date, security code, etc.).

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