26 Jan How to Account for Fraudulent Credit Card Transactions?
Shoppers today see stories of massive data breaches and widespread credit card fraud and wonder whether their financial information is safe when they conduct a transaction. Businesses, too, must also deal with the fraud of stolen and fake credit cards. These fake transactions may negatively impact the company’s bottom line if too many false purchases are sent through the company’s credit card processing partner.
A company must develop fraud prevention measures to ensure that the company doesn’t run the risk of having its merchant accounts closed and can also provide customers with a safe buying experience.
Keep Business Accounts Separate
One mistake that some companies make is that they don’t keep business and personal accounts separate. The company’s merchant account should never be connected to the personal account of the business owner or any business partners. Reducing the impact of fraud means reducing the likelihood that fraudulent purchases might impact companies outside of the business space. Keeping merchant accounts separate also streamlines record keeping and makes fraud easy to spot.
Remain Vigilant and Take Action
Most businesses will come into contact with a fraudulent or stolen credit card on occasion and may fall victim to several deceptive transactions without strong record keeping. The credit card industry has become an expert at catching credit card fraud; however, a company might end up paying extra fees or for the fraudulent transactions if a purchase slips through the cracks for a few months. The longer it takes to recognize fraud, the more likely it is that the business will have problems getting a refund from the credit card issuer.
Cyber Security is No Joke
Businesses are often not liable for fraudulent transactions that occur as a face-to-face transaction, such as at a retail store. However, a business might be financially libel for transactions that occur online or over the phone. Cyber security and advanced shopping cart programming that protects these “card-not-present” transactions is essential for all companies that use credit card processing beyond the retail environment. Fraud prevention measures need to be updated every year with new software and programming.
Credit card fraud hurts everyone, from the businesses that provide goods and services to customers who don’t have money to spare when cards are stolen, and fraudulent transactions occur. Companies must often have funds in reserve to deal with fraudulent credit card transactions, but vigilance and cyber security also help to reduce costs associated with fraud.