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As eCommerce continues to grow in popularity, so do the risks associated with online payments. With the rise of online stores, payment fraud has become a significant concern for merchants. Payment fraud can cause devastation to your business, including lost revenue and damage to your reputation. Therefore, it is essential to safeguard your eCommerce website against payment fraud. This article will explore four ways to guard against payment fraud when setting up your UK eCommerce website.
1. Use a Secure Payment Gateway
A secure payment gateway is the first line of defence against eCommerce fraud. A payment gateway is a third-party service that securely processes payments on your website.
When selecting a payment gateway, choosing one that is reputable and has a track record of securely processing payments is essential. In addition, look for a payment gateway that is PCI DSS compliant, which means it has met the Payment Card Industry Data Security Standard requirements for handling credit card information. PCI DSS compliance protects your customer’s payment information from fraudsters.
Additionally, ensure the payment gateway you choose is easy to integrate with your eCommerce platform. Most eCommerce platforms offer built-in integrations with popular payment gateways like Paypal and Stripe.
2. Implement Fraud Detection Tools
Fraud detection tools are software solutions that help detect and prevent fraudulent transactions. These tools use various methods to identify potentially fraudulent transactions, such as analysing user behaviour, IP addresses and transaction history.
Some eCommerce platforms, such as Paypal and Stripe, offer built-in fraud detection tools that help identify suspicious transactions and potential account takeovers. These tools can help you identify potentially fraudulent transactions before they are processed, allowing you to cancel the transaction or request additional verification from the customer.
In addition to built-in fraud detection tools, many third-party fraud detection solutions are available. These solutions can provide more advanced fraud detection capabilities like machine learning algorithms and real-time transaction analysis.
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3. Verify Customer Information
Verifying customer information is another way to guard against online fraud. When a customer makes a purchase on your website, ask for their full name, address and phone number. You can use this information to verify the customer’s identity and guard against common types of online payment fraud.
Additionally, your eCommerce store should consider implementing a two-factor authentication process for high-risk transactions. Two-factor authentication requires customers to provide additional verification, such as a password or security question, before processing their transaction.
4. Monitor Transactions and Customer Behaviour
Monitoring transactions and customer behaviour is another way to guard against payment fraud. Keep an eye out for unusual or suspicious transactions, such as orders for large quantities of high-value items or orders with multiple shipping addresses.
Additionally, you should monitor customer behaviour to identify potential fraudsters. For example, be aware of customers who:
- repeatedly order and return items;
- use multiple credit cards to make purchases; or
- use multiple email addresses.
Finally, consider using fraud prevention services, such as Riskified, that monitor your website for suspicious activity. These eCommerce fraud prevention tools use machine learning and data analytics to identify patterns and anomalies that indicate fraudulent activities. By doing so, these services can alert you to potential fraud and identity theft and provide recommendations for preventing future fraud.
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Key Takeaways
Payment fraud severely threatens eCommerce merchants, especially those who have just started their UK eCommerce websites. However, you can safeguard your website against fraudulent transactions by taking the steps outlined above. Use a secure payment gateway, implement fraud detection tools, verify customer information, and monitor transactions and customer behaviour to protect your company and customers from payment fraud.
When setting up your UK eCommerce website, it is essential to prioritise security and take steps to prevent payment fraud. Some of the most critical methods include using safe payment gateways, monitoring transactions for suspicious activity and using fraud prevention tools to help you identify fraudulent transactions. By taking these steps, you can provide a safe and secure shopping experience for your customers and protect your business from the devastating effects of payment fraud.
If you need help guarding against payment fraud, our experienced e-commerce and online business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Common types of eCommerce-related fraud include chargeback fraud, account takeover fraud and card testing fraud, as well as the use of stolen credit card numbers.
The sale of stolen personal data on the dark web has led to a rise in fraudulent online transactions. As such, eCommerce websites are now expected to use modern, up-to-date fraud prevention solutions to stop them.
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