Card-Not-Present Fraud Leads Amongst Cyber Crimes

When digital platforms can provide a secure and straightforward purchasing of goods and services, everyone involved in the process, like banks, merchants and consumers, win. But with rising instances of fraud, making these transactions safe and easily accessible is becoming a challenge. Experts have projected that over $70 billion will be lost globally in the next five years in “card not present” frauds. And yet, the masses prefer to use credit cards to make payments, with cryptocurrencies still vying for mainstream adoption.

What is the “Card not Present” Fraud?

Card-not-present fraud is a type of credit card fraud in which the consumer does not physically present the credit card to the merchant during the fraudulent transaction. It can occur on transactions that take place over the phone or online. It is generally difficult to avoid this type of fraud because merchants cannot examine the credit card physically to detect possible card fraud, such as altered account number or missing hologram. It is the merchant who bears the loss incurred in these transactions.

How Does it Happen?

The fraudsters have the information about the cardholder’s account, which could have been acquired through various sources. This information could include the cardholder’s name, account number, billing address and even the CVV. Here’s how fraudsters gather the data:

Skimming: This involves getting card information when the cardholder isn’t aware, such as a waiter at a restaurant or a store clerk, who can merely note down the information while making a transaction for the customer.

This involves getting card information when the cardholder isn’t aware, such as a waiter at a restaurant or a store clerk, who can merely note down the information while making a transaction for the customer. Phishing: Here, fraudsters send emails as an official entity, like a bank employee, with the hope that cardholders will respond with the information.

Here, fraudsters send emails as an official entity, like a bank employee, with the hope that cardholders will respond with the information. Black Market: Hackers gain access to the servers of restaurants, retailers or even cloud platforms and then sell the stolen files to others, who might use this information to conduct fake transactions or other criminal activities. The fraudsters have access to the data, making it way more difficult to prevent “card-not-present” fraud. Merchants can take stringent measures to protect client data, but hackers seem to always find a way in. A case in point is the Marriott’s data breach at the end of November 2018.

Hackers gain access to the servers of restaurants, retailers or even cloud platforms and then sell the stolen files to others, who might use this information to conduct fake transactions or other criminal activities. The fraudsters have access to the data, making it way more difficult to prevent “card-not-present” fraud. Merchants can take stringent measures to protect client data, but hackers seem to always find a way in. A case in point is the Marriott’s data breach at the end of November 2018. Chargeback Fraud: This is another risk of card not present transactions, where the customer receives a product or service but tells their bank that they didn’t authorise the transaction. They can file a chargeback, where the merchant loses both the product and the money, because the customer paid it.

Blockchain Offers a Safer Option

Banks have introduced EMV chips, although they too are unable to stop such fraud completely. On the other hand, transactions via blockchain or cryptocurrency can solve this problem for both merchants and consumers. With its distributed ledger, immutable records and need for consensus across nodes for transactions to be completed, they entirely bypass credit card security threats. And, one blockchain project that is working on making the use of blockchain and cryptocurrency simple and convenient for the public is the IronX Exchange.

IronX is the result of a joint venture between IronFX Group, an award-winning global online trading platform with connections to top-tier financial institutions, and EmurgoHK Group, the creators of Cardano.

The IronX Exchange has obtained licensing from the Estonian Financial Intelligence Unit, ensuring the future platform will be regulated. The exchange is currently working on also getting the Gibraltar and Malta licenses. IronX Exchange will provide a full range of traditional fiat and crypto wallet funding options and 24/7 support in over 30 languages.

The main idea is to provide the flexibility and the already established convenience of a traditional platform and combine it with the latest developments in blockchain technology.

Moreover, best-in-class banking and payment methods, together with the already-amassed significant IronFX Group assets, including multi-regulatory licensing, a large customer base and robust operational excellence, will make the IronX Exchange stand out from the rest.