What is a card-not-present transaction?

Card-not-present transactions are those that take place without the physical card being present. This type of transaction is also known as an “MOTO” transaction, or mail order/telephone order.

There are a few different scenarios where a card-not-present transaction might take place:

  1. You make a purchase over the phone or online from a company that doesn’t have a physical location
  2. You’re traveling and need to make a purchase, but don’t have your card with you
  3. You want to send someone a gift card or other type of prepaid card

Card-not-present transactions are generally more risky for businesses than transactions where the card is present. This is because it’s harder to verify the identity of the cardholder and there’s a greater chance of fraud.

To help offset this risk, businesses typically require more information from the customer when a card-not-present transaction is being processed. This might include the customer’s billing address, shipping address, and phone number. The cardholder may also be asked to provide a code that is printed on the back of their credit card.

How do card-not-present transactions work?

When a customer makes a purchase without their card being present, the business will need to obtain an authorization from the card issuer. This is done by submitting the customer’s credit card information, along with the purchase amount, to the card issuer.

If the card issuer approves the transaction, they will provide an authorization code that the business can then use to complete the purchase. Once the transaction is completed, the funds will be transferred from the customer’s credit card account to the business’s bank account.

Are there any special rules for card-not-present transactions?

Yes, there are a few things that businesses need to be aware of when processing card-not-present transactions:

  1. The customer’s credit card information must be entered manually into the point-of-sale system. This means that businesses can’t simply swipe the card to obtain the information.
  2. The customer’s signature is not required for a card-not-present transaction.
  3. businesses must obtain an authorization code from the card issuer before they can complete the transaction.
  4. If a customer disputes a card-not-present transaction, the burden of proof is on the business to show that the purchase was legitimate.

What are some tips for businesses processing card-not-present transactions?

There are a few things businesses can do to help reduce the risk of fraud when processing card-not-present transactions:

  1. Verify the customer’s identity before processing the transaction. This can be done by asking for additional information such as the customer’s billing address, shipping address, and phone number.
  2. If possible, ship purchases to the billing address of the credit card. This will help to ensure that the cardholder is receiving the purchase.
  3. Use AVS (address verification system) when available. This service compares the billing address of the credit card to the address on file with the card issuer. If the two addresses don’t match, the transaction will be declined.
  4. Use a fraud detection service to screen orders for suspicious activity. These services can help to identify orders that are likely to be fraudulent.
  5. Keep your software and point-of-sale system up-to-date with the latest security patches. This will help to prevent hackers from accessing your system and stealing credit card information.
  6. Don’t store credit card information on your servers or in your database. If this information is compromised, it can be used to make unauthorized purchases.
  7. Require a minimum purchase amount for card-not-present transactions. This will help to discourage small purchases that are more likely to be fraudulent.
  8. Be extra vigilant when processing orders from new customers. These orders are more likely to be fraudulent than repeat orders from existing customers.
  9. Review your records on a regular basis to look for any suspicious activity. If you see something that doesn’t seem right, don’t hesitate to contact the customer or the card issuer.
  10. Have a policy in place for dealing with suspected fraud. This will help to ensure that all orders are handled in a consistent manner.

Card-not-present fraud can be a serious problem for businesses, but there are steps you can take to help prevent it. By following these tips, you can help to protect your business and your customers.

 

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