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Tech Bytes: Three solutions to solve the ‘card-not-present’ conundrum


Online shopping is expected to reach record levels this holiday season, with some reports suggesting it may even match — for the first time ever — physical store spending.

Along with the increase in digital transactions, many experts are also pre-dicting a surge in online fraud. A couple of factors have experts con-cerned, starting with the EMV liability shift. With retailers focusing their attention on getting store-level equipment and networks compliant with the Europay, MasterCard, Visa mandate, many would-be thieves are now turning their attention to online retailing as a means of pilfering cus-tomers’ personal information — an easier task with non EMV-required card-not-present transactions.

Also causing concern are the promotional emails flooding inboxes that feature links designed to redirect users to a retail website through the simple click of a mouse. However, savvy fraudsters can easily create fake emails containing links to fraudulent sites all ready to obtain an unknow-ing shopper’s personal information.

As retailers head into their busiest season, they need to let consumers know their data is being protected. Here are three tips to help keep con-sumers’ holiday “card-not-present” purchasing smooth during the holi-days and all year long

• Do not embed URLs into promotional emails. Currently, 55% of shoppers will click a link from a known source, even if they weren’t expecting anything, according to Arbor Networks’ study. Sure, it’s easy to embed links into emails. But a more secure solution is to send shoppers a promotion code redeemable online — and then re-quire shoppers to visit the site directly.

• Enhance online security methods. Firewalls are great. Two-factor authentication and tokenization are even better. However, why not consider another method to secure customer data? One option is three-domain (3D) security. Available through certain payment sys-tems, the augmentative fraud prevention scheme authenticates pay-ments using three-way validation: from the company where the purchase is being made from; the acquiring bank, and the card issu-ers themselves. The result is verified, secure transactions that pro-tect retailers and consumers from card-not-present fraud.

• Be complaint with new chip regulations. The EMV Liability Shift Mandate is officially a year old. But as of late September, 44% of U.S. card-accepting merchants had EMV terminals, and a mere 29% were processing chip-enabled transactions, according to The Strawhecker Group (TSG).

Until EMV chips are commonplace across the industry, retailers will ex-perience friction across the checkout process — from customers and as-sociates alike — especially as ship-from-store services become more mainstream.

The path to success however, is not completely about getting the equip-ment in place, but ensuring it is certified by merchant processors and card networks, and that personnel and back-end systems are able to recognize fraudulent transactions. Once all of the pieces work together, retailers can better protect customer data from fraudsters.
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