The e-commerce industry is revolutionizing by reshaping the shopping attitude of customers. While shifting them from physical stores to online platforms, retail businesses are opening doors for fraudsters as well. Instances such as payment scams, identity theft, and others are exposing e-commerce sites to both reputational and financial losses. Similarly, due to Card-Not-Present (CNP) fraud, consumers lost over $10 billion.
The e-commerce industry faces a noticeable increase in transaction scams which are costing hefty amounts due to failed deliveries and chargeback claims. These risks affect customer experience leading to their dropoff. Therefore, retail stores require online address verification to validate payments. In case the card is not present these solutions analyze the location of customers. This blog entails how address verification services counter fraud risks.
Address Verification System – Steps Involved in Validating Credit Card Purchases
In order to provide a secure shopping experience, e-commerce platforms are bringing in more strict measures. However, lengthy and complex identity verification checks during onboarding drive the customers away. It might seem like a third-degree treatment to make an online purchase. Clients using credit cards to make payments are more likely to undergo a variety of checks such as zip codes, Card Verification Value (CVV) codes, and billing address verification.
Information other than details on credit cards is equally important to validate customers and ensure the actual holder is opting for a payment. With this, e-commerce platforms can more security to customers’ online shopping. Furhtmeroe, integrating AI-powered address verification solutions enables them to streamline client onboarding. It provides a user-friendly experience where they have to follow steps and complete registration without any hassle.
The AI-powered address verification services provide geotagging that analyzes the real-time location of customers in case of card-not-present payments. Ultimately, e-commerce platforms can provide legitimate buyers with a shopping experience with more security and fewer threats. In the case of card-not-present purchases, the process involves the following verification steps:
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Address Validation
While making an online purchase, e-commerce sites offer customers various payment options such as cash, credit card, and third-party providers. These choices add to improving customer experience. However, in the case of credit card purchases, retail stores experience various threats such as fraudsters using someone else’s details.
In order to cross-verify buyers and their claim of being the actual hard holder, e-commerce sites need to perform two-factor authentication. This involves verification of address along with other information.
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CVV Verification
The steps involved in customer identification during online purchases also involve the validation of CVV. Where address verification cross-checks the location of buyers, this process ensures the card is present with the owner. CVV is a three-digit code available on the back side of credit/debit cards. This way e-commerce platforms can also counter CNP fraud.
Verification of Address – Countering Credit Card and Payment Fraud
To deter fraud and provide customers with secure shopping options, retail stores need to verify address. This will not only help them discourage false chargebacks but also prevent criminals from exploiting the card details of legitimate holders. Address verification systems further help detect and prevent CNP fraud in the following ways:
Detect Fraudulent Purchases
Imposters use CNP fraud to make a purchase by posing as someone else. This helps them conceal their true identity and expose actual cardholders to legal proceedings. However, in return, this fraud exposes e-commerce sites to an increase in false chargeback claims and huge financial losses.
In order to identify fraudulent purchases, retail stores need to validate the addresses of buyers prior to dispatching any order. For this, the system asks end-users to submit documents including ID cards, passports, driver’s licenses, utility bills, rental agreements, and others as supporting evidence. While criminals can obtain CVVs through illicit means, real-time location analysis while verifying an address identify them.
Identifies Purchases Made with Stolen Cards
E-commerce sites are providing digital payments to limit hassle for customers. However, it is also increasing transaction scams. Criminals get their hands on credit cards or steal information through fake calls by impersonating bank officials. Furthermore, lax identification checks further pave way for these fraudsters to make online payments.
Retail stores need to integrate online address verification solutions to identify purchases made with stolen cards or details. The process involves two types of checks, firstly validating Personally Identifiable Information (PII) such as name, date of birth, and other details. Secondly, analyzing real-time location. Hence, verifying address solutions better helps e-commerce sites to present CNP fraud.
Final Verdict
Address verification services offer multi-layers identification to retail stores for identifying fraudulent purchases and preventing CNP fraud. While e-commerce sites are striving to attract and facilitate more customers, fraudsters are compromising their operations by committing cybercrimes. With an efficient online address verification mechanism in place, retail stores can cross-verify locations, provide geo-tagging solutions for seamless purchases, and validate transactions in real-time.
