person making a credit card transaction with a worker
Accepting credit card payments for business transactions is commonplace, but along with credit card transactions comes the risk of fraud. — Getty Images/Ridofranz

In an age when data breaches and identity theft are increasingly common, most businesses are likely to encounter some kind of fraudulent activity. Even if your company’s databases and customer information aren’t hacked by a cybercriminal, there’s a good chance one might try to make a purchase with a stolen credit card.

If your business accepts credit card payments, here’s what you need to know about the security risks involved with credit card transactions.

Credit card security signs to watch out for

Your credit card processing and sales data can help you identify fraudulent transactions, if you know what to look for. Here are a few signs that you might be dealing with attempted credit card fraud:

  • Expedited shipping to an address that differs from the billing address
  • Mismatched IP location and credit card address
  • Suspicious-looking email accounts
  • Multiple failed attempts to enter a credit card number
  • Repeated declined transactions

Simply being alert and aware can limit the amount of suspicious activity taking place at your business.

Simply being alert and aware can limit the amount of suspicious activity taking place at your business.

How to avoid credit card fraud

There are more advanced measures you can take to prevent fraud. As a business owner, you owe it to your customers to take precautions and protect their payment information. Here are some ways to avoid fraud before it can do damage.

1. Choose a PCI-compliant payment gateway

As a business owner accepting credit card payments, it’s crucial you are compliant with regulations set by the Payment Card Industry Security Standards Council. Failure to comply will put both your business and customers at risk. Should your business experience a breach or attack, this will increase your liability and may require you to pay up to $500,000 in fines. A PCI-compliant payment gateway, which stores credit card data on your payment gateway’s system instead of your own, can help you adhere to these regulations.

2. Follow EMV compliance laws

EMV technology is the square chip in your credit card that protects consumers from credit card fraud by generating one-time transaction codes. This is a much safer option than magnetic stripe cards, which transmits the same information for every transaction.

On the merchant side, this means upgrading your POS system to ensure EMV compliance. While it might be an expensive, and sometimes inconvenient, requirement, it’s better than being liable for fraudulent transactions.

3. Watch out for suspicious behavior in person

While you can’t always spot fraud at the scene of the crime, being vigilant will help lower the risk. Here are some point-of-sale behaviors to watch out for:

  • Pulling the credit card out from a pocket rather than a purse or wallet
  • Purchasing many expensive or random items at once
  • Rushing the transaction
  • Finding an excuse not to swipe the card or insert the chip

If you witness any of these strange behaviors, you should consider reporting the transaction for potential fraud.

4. Do not store credit card information yourself

No matter what you do, you’ll want to ensure you don’t store credit card information yourself. Instead, as stated above, use a PCI- and EMV-compliant system.

Additionally, you should never store electronic track data or card security numbers, and you should ensure electronic storage of account numbers (including information from phone recordings) is encrypted and paper storage secured.

5. Report suspected signs of fraud immediately

If you notice signs of fraud, don’t wait — act immediately. The earlier you catch the fraud, the less damage is done and the easier the cleanup.

CO— does not review or recommend products or services. For more information on choosing the best credit card processor, visit our friends at business.com.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Published April 24, 2019