Buying online versus in-store are two very different scenarios, especially concerning the liability for accepting a fraudulent transaction. For the eCommerce merchant, a card-not-present (CNP) transaction, which means that the cardholder isn’t physically present with the credit card when using it for a purchase with the merchant. For online sellers, having credit card fraud protection for merchants when you launch is an important step.

When a retailer begins accepting online payments, they have officially entered the card-not-present world. For a consumer, the choice between buying merchandise online or in-store merely comes down to a matter of convenience, cost, and availability.

Buying online versus in-store are two very different scenarios, especially concerning the liability for accepting a fraudulent transaction.

For the eCommerce merchant, a card-not-present (CNP) transaction, which means that the cardholder isn’t physically present with the credit card when using it for a purchase with the merchant. For online sellers, having eCommerce fraud prevention services when you launch is an important step.

With no standard security measures like checking identification and paying using a chip reader card, an internet transaction is deemed to have far less eCommerce fraud prevention and eCommerce fraud protection measures.

Given the risk involved with accepting an online transaction, the liability of accepting a fraudulent transaction rests with the retailer themselves, rather than the issuing bank. If a merchant accepts an order online that is later deemed a fraudulent transaction, it’s the merchant’s responsibility to refund the consumer. The cardholder’s issuing bank will collect on behalf of the cardholder.

Understanding this liability is essential for online retailers, many of whom are unaware of their duty to examine their online purchases closely to weed out credit card fraud they may be on the hook for.

It’s imperative that an eCommerce merchant implements online credit card fraud detection steps to provide some sort of eCommerce fraud prevention service to safeguard themselves from the costs of fraudulent transactions, and credit card fraud as a whole, for many reasons.

Firstly, the entire cost to the merchant for accepting a single fraudulent purchase is often more than double the cost of the actual purchase itself, because they cannot recover the original merchandise or services that had been fraudulently shipped, and because they must also repay the defrauded customer.

Secondly, the retailer’s bank (known as the acquiring bank, together with whom the merchant stores their money) heavily monitors their customers for credit card fraud acceptance, and might charge a fee for each and every chargeback received.

And, if the merchant starts to process tens of thousands of fraudulent transactions, an acquiring bank might not only drastically raise credit card fees, they might even take steps to shut down a retailer’s merchant account altogether.

With all this information presented to you, it isn’t meant to overwhelm you with all this talk of credit card fraud. As an eCommerce retailer, it’s important to educate yourself about what credit card fraud looks like, what it involves, and how to arm yourself with eCommerce credit card fraud protection for merchants.