Making sure you can collect your money
Fraud is a nasty word and something that
can cause your business to lose money. Here we cover some of
the ways you can lower your risks while doing business online.
Now that you have made the sale, and the
consumer has provided you with their credit card, how do you
know that the credit card they have provided you with is
valid? How do you know that the consumer has sufficient credit
to cover the purchase they are trying to make? In order to
determine the answers to these questions, you need to submit
the credit card and transaction details into the credit card
processing network (Visa, MasterCard, Amex, or Diners). You
can do this manually for small volumes, or you need some software, a service
which will take your transaction details, submit it into the
processing network, and have a reply back to you in a matter
of seconds. This is done via "payment gateways" and
"payment processors". The payment gateway will take
your transaction information, forward it into the proper
credit card network and let you know if the transaction has
been approved or rejected. If approved, you can confirm the
sale with the consumer and start the order fulfilment and
shipping process. But you have no assurance that the person using the card is authorised to make the purchase.
Besides checking the credit card number,
expiry date, and credit balance, there are many other things
you can do to make sure you are not dealing with someone who
will take your product (or money) and run! Another method of
lowering fraud is to check the address of the consumer and
make sure it matches the address details for the corresponding
credit card they have provided. This is called "AVS"
address verification, and is supported by many of the credit
card networks. For a good discussion on AVS and other methods
to lower risk of fraud, please see the following: Australian Institute of
Criminology, Fraud Prevention
Be very careful with "Sender" email addresses from
free providers such as hotmail and yahoo. Never ship expensive
merchandise before phoning the buyer.
See St George Bank's "Credit
card Fraud on the Internet" for tips on credit card
fraud prevention.
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