How Ecommerce Merchants Can Avoid Chargebacks
Ecommerce merchants using payment gateways for credit and stored value card transactions must ensure that their gateway provider offers screening features. These features include address verification (AVS), CVV2, and an IP locator. Top payment gateways will offer all of these services and they should be automatically activated and only turned off at your request.
Payment gateway providers should use the Address Verification System (AVS). AVS protects ecommerce merchants by comparing some of the billing details on the order to those held by the cardholder’s bank. However the transaction may receive approval even in cases where the address verification information does not match. This makes the ecommerce merchant vulnerable to chargebacks. To avoid this scenario check the settings on you interface so that transactions are “flagged” as potentially fraudulent.
Top payment gateway providers will offer CVV2 checks. The CVV2 number are the three digits on the backs of a credit and debit cards, In the case of AMEX cards it is the four stand-alone digits on the front of the card. This should ensure that the person using the card is in possession of the card itself. This is not foolproof as some thieves can get hold of this information.
Address Verification and CVV2 will not protect an ecommerce merchant from all fraud and fraudsters, but it will minimize your risk and responsibility. Chargebacks increase the cost of business for everyone. Chargebacks have in some instances, put fine small ecommerce merchants out of business. Customers value their privacy, but they also value the lower cost of services due to the use of security measures.
Loretta Hunnicutt
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