Protect your merchant account from credit card fraud during the holiday season

Accounts Wizard
November 19, 2020

Black Friday, Cyber Monday, and the rest of the holiday shopping season is on our doorstep. With COVID-19 infections on the rise this fall, the online shopping season is primed to break records in the 4th quarter of 2020. Keep an eye out for credit card fraud to make sure you and your company have a great holiday.

That said, there can be some negative issues associated with all that extra traffic, notably credit card fraud. “In a new Kount survey of more than 500 digital merchants, 96% say that the upcoming holiday season is more important to their business. Nearly half say that their business will need to catch up on sales in order to recover from the economic downturn. For businesses, this means a sharp increase in competition for limited consumer dollars, and through eCommerce channels that are enticing targets for holiday fraud.” Card-not-present (CNP) fraud can rise by over 20 percent during the holiday season, starting with Black Friday and Cyber Monday and lasting through to the end of the year. Items targeted by fraudsters during the holidays have an average ticket value of $215.

Merchants should prepare to:

  • Reduce fraud-related chargebacks from payments and friendly fraud
  • Secure and control inventory – closely monitor order size and frequency
  • Roll out and protect new channels – “new” products are often targeted
  • Prevent account takeovers – continually check for breached or compromised credentials on your accounts
  • Reduce checkout friction – evaluate your transaction process and ensure your payment gateway is not cluttered with unnecessary friction points

The two primary steps to holiday credit card fraud prevention

Fraud comes in many different forms, but merchants can take two main preventative measures to help prevent holiday fraud.

  1. Identify & reduce fraud-related chargebacks. The ability to identify and stop high-risk transactions in advance or to manage chargebacks in flight can help to prevent, stop, or deflect chargebacks and avoid monitoring programs.
  2. Identify & prevent friendly fraud. Friendly fraud often uses chargebacks as a tactic in policy abuse, shared cared fraud, and more. Identifying likely culprits can help control not only chargebacks but also product losses.

Digital business and merchant chargeback protection are essential tools in everyday fraud protection. However, the increase of eCommerce revenue in 2020 makes these tools essential to protect revenue and avoid costly chargeback monitoring programs during the holiday season.

What else can a Merchant do to protect themselves from this holiday?

As a merchant, you should always look for ways to proactively protect your business during the rush season. Here are some of the better ways to keep your business safe during the year:

  • Monitor not only sales and web traffic but also why credit cards are declined. If there’s a sudden increase in “hard declines,” those cases should be reviewed thoroughly to prevent future declines.
  • Keep a list of fraudulent transactions that you’ve had in the past and always check new orders against that list.
  • Ensure you’re partnering with a merchant processor that can help you recoup chargebacks and fight fraud on a daily basis, preferably with an online fraud and chargeback prevention program.
  • Due to the sales volume you’ll receive as a merchant during the holiday season, you should make sure your merchant processor offers you unlimited processing with extremely limited or no-hold options on your account.
  • A shortlist of other outliers to monitor include:
    • High-value orders
    • Large quantities on specific items (i.e. electronics)
    • Orders with big-ticket items
    • International shipping addresses
    • Transactions using multiple cards but shipping to a single address
    • Multiple transactions on one card but shipping to multiple shipping addresses
    • Multiple transactions on one card over a very short period of time

There’s no simple way to stop chargebacks or fraud completely in their tracks, but merchants can certainly reduce them to a whisper if they follow these simple steps and keep in constant communication with their processing provider to stay ahead of any potential issues.


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