How can merchants reduce risk of fraudulent card transactions? One of the most widespread credit card fraud schemes involves magnetic stripe counterfeiting. This scam involves re-encoding a valid account number onto an existing magnetic stripe. One way to prevent fraud at retail locations is to require cashiers check the last 4 digits with your software. We automatically program the last 4 digits as a required field for all retail merchants. Here is how it works with our host based payment processing technology and a signature capture terminal:
- Cashier presses the sale button and enters the transaction amount. Other parameters such as an invoice number may also be required.
- Customer swipes their card and data is immediately encrypted
- Cashier asks to see the card, checks to see that it is signed, and then enters the last 4 digits of the card in the system.
- Cashier presses submit and data is sent via secure internet connection to host; host returns message:
- approval and a request for signature on terminal; customer signs and presses enter
- approval and terminal requests pin number if the technology has determined that this transaction would best go through as a pin debit transaction. Customer presses cancel if he/she wants to enter as a credit transaction and is immediately prompted for signature.
- denial and reason
- If the magnetic stripe does not match the numbers you key in, the terminal will display “Last 4 Digits Do Not Match/Mismatched Digits” and will halt the transaction. (CenPOS will outline the box in red will not let user proceed). To ensure that you didn’t enter the wrong number, try to run the transaction once more. If your terminal displays the same warning, call the Automated Voice Authorization Center and tell the operator that you have a “Code 10” authorization.
- A request for a “Code 10” authorization tells the operator that a suspicious transaction is taking place. If you can’t speak freely, the operator will read a list of possible problems with the card so you can answer yes or no and avoid alerting the customer. You should attempt to stay on the line and keep the card until the authorization is complete. If the authorization is denied, follow the instructions the operator gives you.
- If the card is fraudulent, do not attempt to apprehend the card user. If the operator instructs you to retain the card, attempt to do so peacefully. Follow any specific instructions the operator gives, unless they put you at risk.
Any credit card terminal can be programmed to prompt for the last 4 digits. A host based system also allows merchants to change and add security parameters on the fly for all locations.
Is your merchant processor helping you with risk management? For just pennies a day, you can have a host based payment processing solution that will reduce risk regardless of your payment processor, in addition to many other benefits, including cost reduction.