In a brick-and-mortar retail store security might be adequately covered by a door that locks, a key on a cash register, a safe combination or if the stakes are high enough an armed guard. For a couple decades, a great deal of business has shifted to the Internet. When a business owner hangs their virtual shingle out on the web, ecommerce security challenges and risks take on a completely different form.

 

When you swipe a card in a store, there are some protections for dealing with fraud. You get a signature and may even have security camera footage of the person at your counter. What many online merchants may not realize, taking a credit card by phone or online is called a CNP or card-not-present transaction, and they come with very different rules. The fees may be higher and the risk of fraud is almost completely on the retailer. As an ecommerce retailer, you have the burden of identifying the purchaser’s identity. You typically will confirm the address and the verification code on the card to help authenticate the purchaser. The game is changing and more tools will be needed to protect your business and the identities of your customers.

 

The problem is bigger than just allowing greater margins for loss due to shrinkage. Some of you may have profits that are high enough to eat the cost of chargebacks, investigations and the cost of goods lost, must be nice. Now there are other things to worry about. If the rate of fraudulent transactions even reach 1%, the merchant can’t just cover the difference, they will likely be placed on a probationary watchlist. Following a probation period, if those problems aren’t fixed, they won’t be permitted to accept credit card payments any more.

 

The first step and best defense against these risk is your knowledge. Knowing what the consequences are, taking appropriate measures and carefully selecting your processor and their security features will go a long way in reducing your risk.

 

Knowledge is Power

As mentioned, many processors offer add-on services to help combat online fraud. These could include:

• Identifying and rating risky transactions
• Categorizing and tracking those transactions and managing them through the process
• Offering adjustable rules for higher-risk cases, one size doesn’t fit all

 

Whomever you select to be your processor, whatever products or features you select with them, don’t forget to thoroughly read through your Terms and Conditions. Understand your liability and the amount your fees can change for different reasons. Some of those higher-risk transactions may cost more to process, even if they are completed successfully. If you find you’ve gotten into a bad deal, there may be costly early cancellation penalties. Don’t just pay attention to the low rate the sales rep is quoting. Knowing the full rules in the contract you’re signing and how they may change will protect you from a lot of frustration down the road.

 

Decide What Information You Keep And Stay Vigilant

It has been a couple years, but the words Target and Credit Card Information still causes fear and pain in shoppers’ minds. It wasn’t that Target was stockpiling a lot of our purchasing information. It was the bad guys were saving it inside their system without their knowledge. Then when security alarms started going off that the hackers were trying to get that data out, the warnings were ignored.

 

Play To Your Strengths

Hackers are everywhere and they are sophisticated and clever. One of the best pieces of advice in minimizing risk is to partner with a third-party payment processing company to handle all the payment transaction data so you don’t have to carry that burden of risk. These companies specialize in watching the security of the transaction. It is what they do. It is their primary product.

 

Unless it is what you do, the stress and risk of handling customer credit card transactions is a distraction from the core of your business. I wouldn’t expect financial service company to be any good at selling crafts or writing music, so why would you suppose you can give adequate protection to your customer’s data while you are concentrating on your main thing?

 

Options for the Little Guys

Not every Internet company is large enough to reconcile the expense of a large-scale partnership with a big name payment processing company. They may have offerings for small business, but there are other payment alternatives that are disrupting this industry and can be a good alternative helper for ecommerce business.

 

Companies like Google, PayPal and Amazon have created e-wallet solutions for enabling reliable and relatively safe payment processing to any web-enabled platform. They have tools that you can use to build options to collect payment from an iPad kiosk, from your blog or even inside your app or mobile game! They help you create a small bit of code that, when you add it to your website or digital platform, builds a small box that is a secure way of handling payments. You get the sale and never had to manage the security within the box.

 

Summary

There are many options and the laws and technology options are changing really fast. You need to decide what path works best for your business. You can learn how to specialize in Internet security alongside your main business. Or you can review the many options that are available. You can choose from the high-end, like a limo-driver and police escorts for the data. You can also get there by buying a bus ticket level of support. Both put the handling of this tricky road to travel into the hands of qualified experts.
Do your research, know fully the contract you choose to sign. Your business and your customers’ financial information are depending on it.