Online merchants become more at-risk for online fraud each year, making fraud detection and prevention a vital component of successful business.

The average number of successful fraudulent transactions grew 32.1% in 2015, with retailers reporting an average of 206 fraudulent transactions per month compared to 156 in 2014. Retailer’s prevention efforts simply aren’t keeping up with the growth in fraud.

What most merchants don’t know is that there are some powerful tools that come with most payment gateways. These tools can be used to gather information about an order to make an informed decision about whether or not to process the payment and ship an orders that may be potentially fraudulent.

You’ve no doubt had this experience: you’re checking out at a store and are asked for your ID at checkout when you use a credit card, perhaps if the purchase is over a certain amount. You might even have a policy about this at your own store.

Is it legal for businesses to ask for ID?

Yes, it is absolutely legal. However, card networks have rules that stores must abide by when it comes to dealing with verification. These rules vary depending on whether or not a signature appears on the back of the card.

Visa & Mastercard’s policy is that if the card is unsigned, the merchant must ask that the card be signed and that the customer provide government ID. If the card is signed, the merchant is not allowed to require ID.

Visa’s policy is that “merchants cannot as part of their regular card acceptance procedures refuse to complete a purchase transaction because a cardholder refuses to provide ID.”  Visa’s advice to merchants: if a cardholder looks suspicious, the merchant should make a Code 10 authorization request call that alerts the card issuer to suspicious activity without alerting the customer.

“A merchant must not refuse to complete a transaction solely because a cardholder refuses to provide additional identification information,” says MasterCard.  It even has a special page on its website that cardholders can report to them when merchants do this.

Summer camps, snow removal and vacation services are only active for a small portion of the year. They require the ability to accept payments during those few months, but most processors  will charge them a monthly fee or have the merchant reapply each year. Is there a better option?

Come the seasonal merchant account, which is custom-made for this purpose. There is no need to pay unnecessary fees or waste time on the application process each year. Credit checks, which potentially lower one’s credit score, do not have to performed each year. Additionally, if a merchant had credit problems during the year, it could prevent the merchant account from being opened entirely, or force them to get set up with a more expensive service. Unfortunately, past processing history does not entitle a merchant to the same service in the future. A seasonal account prevents these issues entirely.

The seasonal account allows a merchant to “press pause” on their account as opposed to a “hard stop”.  This way, the account is ready whenever the business needs it and all that needs to be done is send the processor a re-opening letter.

However, there are several things to keep in mind:

An article by American Express offers some solid advice on precautions retailers should take to prevent losing business if unscrupulous customers claim they never received delivered orders.

Small businesses are generally hit hard by chargeback fraud. Aaron Press, Director, Payments & eCommerce for LexisNexis said, “We do know that small merchants invest less in fraud protection and are more likely to be defrauded because they have fewer ways to catch things in the process, And fraudsters know this.”

If your business receives too many chargebacks, aside from losing valuable, you can potentially damage your standing with the processing bank. If the chargebacks continue, you may even lose your merchant account and face difficulties finding another service provider.

Here are some tips on how to avoid chargebacks altogether:

Most business owners have dozens of passwords for various websites, software and services. With over 30,000 web sites hacked per day hackers are now cracking passwords faster than you can process a payment.

The challenge is, how do you develop a strong password for each site without having to remember them?

One solution would be to use a secure password generator and store their passwords in a password manager. The problem with this is that it’s a hassle to constantly be looking up passwords.

We want to share with you a simple technique that will keep your passwords at the top of your mind.

How? By creating an algorithm.

For one reason or another, red flags are waving and your senses are telling you that the customer at your store counter is trying to purchase goods with a stolen credit card.

Maybe his name or signature are glaringly nothing like those on the ID. Maybe he’s quickly buying thousands of dollars’ worth of your most expensive items. Maybe he’s suspiciously trying to buy one hundred of the same kind of high-end camera.

Now what?

Phishing is when fraudsters pretending to be from well-known companies, organizations, or government agencies contact consumers and try to trick them into revealing their personal information.

That information is then used to commit fraud like opening new accounts in your name or taking over existing accounts like online banking or iTunes. It can happen over the phone, on email or even through text messages. Protect yourself with these quick tips:

According to PCI standards, a merchant may never store lists with customer’s card data on any medium which is not PCI compliant. Word documents and spreadsheets, even if they have a strong password, are not PCI compliant, and thus may never be used to store lists with card info. Even if you create a custom program with many levels of security, it is still not PCI compliant.
(The exception to this regulation would be to store the info of one card on a piece of paper. However, multiple numbers are never allowed, even on paper)

When a customer sees a charge from a merchant they don’t recognize, there is a good chance that they will dispute the card.

For some merchants, the name that appears on customer’s statements is not the name that they operate with (a DBA) or print on receipts. When this occurs, it is important to communicate with customers and let them know which name to expect on their statements.