How ID Verification Can Prevent Card Not Present Fraud

Card Not Present (CNP) fraud refers to fraudulent transactions where a payment card (such as a credit card or debit card) is used for a purchase without the physical presence of the card itself. Card not present fraud is more common than it should be in online and remote transactions, where the cardholder’s information is used to make unauthorised purchases. It’s a significant concern for both consumers, who end up with fraudulent transactions on their cards and businesses who accept the cards and, in some cases, need to repay the card holder without being able to retrieve the goods.

In this article, we will discuss seven reasons why identity verification is one of the best deterrents of Card Not Present (CNP) fraud, other security measures that can combat card not present fraud, and why One Click Verify is the perfect solution to protect your business

Why identity verification prevents card not present fraud

Identity verification is indeed one of the best deterrents to card not present fraud. Here’s why:

1. Authentication of the Cardholder

Proper identity verification methods ensure that the person making the transaction is indeed the legitimate cardholder. This can involve verifying personal information using multifactor authentication, such as a username and password, PIN, or identity documents such as license or passport and biometric facial recognition.

2. Enhanced Security

Implementing multi-factor authentication (MFA) or two-factor authentication (2FA) adds an extra layer of security. For example, even if a fraudster obtains a cardholder’s login and password, they will still need a secondary authentication method, like a one-time code sent to the cardholder’s mobile device, to complete the transaction.

3. Reduced Unauthorized Access

Proper identity verification measures can significantly reduce the likelihood of unauthorised access to cardholder accounts. This includes strengthening passwords, educating users about phishing scams, and implementing account lockout mechanisms after multiple failed login attempts.

4. Monitoring for Anomalies

Banks and financial institutions often use sophisticated algorithms to monitor transactions for unusual or suspicious activity. This includes analysing patterns of card use and geographic location. If a transaction appears to deviate from the cardholder’s normal behavior, it can trigger additional scrutiny or verification steps.

5. Biometric Verification

The use of biometric data, such as facial recognition, can provide a high level of security. It’s difficult for fraudsters to replicate these unique physical attributes. Whilst it may be difficult to implement these on low cost high volume transaction websites, it is worthwhile to consider this option where there are financial transactions or transactions of higher value. These measures can be implemented without impacting your customer journey.

6. Compliance with Regulations

Many regions and industries have regulations in place that require strong identity verification methods to combat fraud. Failure to comply with these regulations can result in severe penalties for businesses beyond the cost of fraud.

7. User Education

Educating cardholders about the importance of protecting their card information and practicing safe online buying behavior is crucial. This can include advising against sharing card details, using secure Wi-Fi networks, and being cautious about phishing emails and websites.

While identity verification is a potent tool against card not present fraud, it’s essential to strike a balance between security and user convenience, or user journey. Overly complex verification processes can frustrate customers and lead to abandoned transactions. Therefore, businesses should

choose the right level of security measures based on the nature of their transactions and customer expectations.

Other measures to stop card not present fraud

In addition to ID verification, other security measures like tokenisation (replacing sensitive card data with a unique identifier), encryption, and robust fraud detection systems should be part of a comprehensive strategy to combat card not present fraud.

Why One Click Verify is the perfect solution to CNP fraud

One Click Verify offers a very easy, seamless, digital, and mobile solution including biometrics matching to ePassport, much like you would have experienced during international travel. The solution allows companies that counter a large amount of card not present fraud to mitigate risk when accepting purchases in a digital financial services or high value retail environment.

One Click Verify: Verify Faster

Businesses can quickly and accurately verify customer information thanks to One Click Verify’s automation of the identity verification process. We can eliminate 99% of identity fraud attempts and meet your KYC/AML requirements. To accommodate companies of all sizes, we provide flexible pricing options. One Click Verify can give you the tools you need to streamline your identity verification process and AML Program requirements and safeguard your most valuable assets, whether you run a small startup or a large corporation.

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