5 Reasons Card Not Present Transactions can be Risky

Welcome to the 2nd blog post in our series on Card Not Present transactions. In this 2nd post, David Orme, SVP Sales and Marketing at IDEX Biometrics provides 5 reasons why Card Not Present transactions can be risky. The previous post in our series on Card Not Present explained what it is and how to avoid fraudulent transactions.

With technology advancing as fast as it is, chances are high that you have participated in a card not a present transaction at some point in the recent past. Card, not present transactions are, simply put, exactly what they sound like: transactions where the card is missing from the equation. Even transactions where a card is there, but the card does not touch the terminal (typically because the card number is typed into the terminal manually) are considered “card not present” transactions. These transactions are important to pay attention to because they invite all kinds of risks. Read on to learn five big reasons for the riskiness of card not present transactions.

They Risk Payment Card Fraud

It has happened to many of us, and too often. Once, usually, is more than enough. Payment card fraud is the bane of modern shoppers, especially since many of us have moved into online and virtual shopping places. These non-physical spaces make use of a card, not present transactions, and this usually means that important information is entered remotely; this is where the risk comes into play. As we enter all our important identifying information, we leave ourselves vulnerable to thieves and hackers. If they obtain the right information while we are entering our details to complete a transaction, they can use it to make our bank accounts their playground. Future businesses are looking into using biometric sensor technology to authenticate transactions, and this should aleviate many cards not present problems.

They Risk Chargeback Fraud for Businesses

Another risk inherent in card not present transactions is called chargeback fraud, and this little trick can be frustrating for businesses that operate online spaces. Chargeback fraud occurs when a customer purchases something online when their card is not present, and they subsequently dispute the transaction or claim that they never received the product. Chargeback fraud is especially tricky to handle because nine times out of ten, the customer is telling the truth. However, there are customers who have taken advantage of businesses before in order to get money back or get products for free, so chargeback fraud will continue to plague businesses that utilize card not present processes.

They Risk Identity Theft in Several Ways

This risk is closely related to risk number one, but it entails an unscrupulous practice that is separate to remote hackers. In a very specific sort of card, not present transaction, the merchant must enter the card number themselves; this occurs in rare instances but it can still invite risk. If the merchant in question is not honest, they may memorize your card information and even sneak a peak at your security code–this is all they need to do in order to use your card later. The only differentiating factor between this risk and payment card fraud as we tend to think of it is the physical proximity of the buyer to the seller. Keeping your funds tied to a biometric sensor can help prevent this problem. While this case is a rare one, it is still one to keep in mind as you shop with your card.

They Risk Technological Problems

Even if a hacker or thief does not access your information, it is still possible that the servers used to process a card not present transaction experience technical difficulties, and these difficulties may compromise your information even if there are no thieves actively targeting you. This is another instance where the added security of a biometric sensor can come in handy, as keeping your funds locked behind your unique bio-signature can help prevent theft.

They Risk Faulty Automation

Another nifty feature of card, not present transactions is their ability to be duplicated in a timely manner, which is what happens if you set up an automatic payment service for, say, your monthly bills. This is convenient, of course, but you also run the risk of missing a payment by accident if something goes wrong.

Card not present transactions are changing the dynamics of shopping and selling, and security is more important than ever. You should do everything in your power to keep your money in your hands where you want it.

The previous post in our series on Card Not Present explained what it is and how to avoid fraudulent transactions.