Do you take online payments? You could end up paying for fraud

Small businesses taking online payments could end up paying the price for online fraud, the Forum of Private Business (FPB) has warned.

According to the FPB, online businesses are at risk, despite the fact debit and credit card fraud has fallen to its lowest level for 11 years as a result of chip and PIN technology.

The risk falls where businesses are expected to refund expenses and pay a chargeback fee to banks where a payment has been blocked by a security system over suspicion of fraud.

Richard Bradley of Accept Cards Ltd has warned business owners to be prepared by ensuring they fully understand and make use of the banks' security systems.

He said: "While debit and credit card fraud fell by 9% to £170 million in the first half of 2011, there is still much to do to stop people who are determined to take money from your business by using someone else's card.

"These criminals are much less likely to target businesses in person via a chip and PIN transaction, and the majority of fraud is seen where the cardholder is not present, in other words mail order and online payments. The best advice is to be prepared."

For online businesses, Bradley advised the following measures:

  • Ensure that your online ‘shopping cart' or checkout is secure and meets the requirements of Payment Card Industry Data Security Standards (PCI DSS)
  • Ensure that your payment software supplier has up-to-date anti-virus and anti-phishing software installed on their computer systems
  • Adopt fraud prevention tools such as Verified by Visa and MasterCard SecureCode on their payment gateway, which prompt customers for their passwords.

Mr Bradley added: "All of these measures will help small business owners to judge whether a cardholder is genuine but it is important to remember that authorisation of a card in not a guarantee of payment whenever the cardholder is not present.

"If in any doubt whatsoever it is important not to proceed with the transaction or deliver the goods at all. At the end of the day, they are your goods and it is your money potentially at risk."