How to Protect Merchant Accounts From Fraudulent Transactions

    high risk merchant

    Merchant fraud is a reality and you need to protect your accounts. This guide shows how to protect merchant accounts from fraudulent transactions.

    In 2020, more companies, including telecom businesses, suffered merchant accounts loss. Between April and May, business email compromise (BEC) increased 200 percent.

    These BEC attacks targeted high-dollar wire fraud and redirected vendor payments. Businesses also reported 36 percent more attacks directed at their operations.

    This drives home the reality that all companies must take action. Keep reading to learn how to protect your merchant account from illegal transactions.

    Understanding Merchant Accounts

    You must accept debit and credit cards to do business in today's market. Merchant accounts are the intermediary between the business and customer bank accounts. This account manages the processing of electronic payments.

    When you make a sale, the money moves from the customer’s bank account into the merchant’s account. The reverse takes place if there’s a refund.

    Keys to Merchant Fraud Prevention

    Fraud occurs via identity theft, stolen cards and/or information, and card-not-present. Security systems must verify customer identity before transactions. At the same time, you want to avoid high false-positive rates which lead to lost sales.


    Illegal chargebacks represent a significant loss of income for businesses. This happens when criminals request a refund for products or services they didn’t buy. The following describes several tactics for fighting these chargebacks.

    • Reconcile your merchant account statements on a routine basis
    • Record a "reason code" for all chargebacks and watch for trends
    • Generate receipts for all e-commerce to provide evidence of product and service delivery
    • Track the time, date, and IP address of all orders in case you need to fight a claim
    • Record or save all phone, text, chatbox, or email communications with customers
    • Follow merchant account company rules and deadlines for filing disputes

    Following these steps can help you mount a successful defense against criminal chargebacks.

    Address Verification

    Always collect the billing address as well as the credit card number for sales. Verify that the billing address provided matches the one from the bank that issues the card.

    If the address is different, determine the reason. One tactic used by criminals is to divert the delivery of products or services to their address. Establish protocols to allow a different shipping address.

    Use Pattern Recognition

    Many security platforms now use pattern recognition to identify customers. This can include keystroke patterns and buying behaviors. Establishing minimum and maximum payments help detect anomalous attempts.

    Why Preventing Merchant Fraud Is a High Priority

    If a person’s account is compromised, they can call to suspend their card. For businesses, this is a different story.

    As a merchant, you must refund the money for unauthorized purchases. This often involves high-priced items or services obtained online. Merchants may be subject to large fees and a damaged reputation.

    Telecommunication Merchant Services Fraud

    The telecom industry has seen rapid growth during the pandemic. These companies are now considered high-risk merchants for cyberattacks and fraud. Some companies have even found themselves with a negative bank account balance.

    As criminals up their game, businesses must have scalable, responsive security solutions. This can be the difference between business viability and failure.

    Are You Confident About Your Merchant Account Security?

    This year has seen an increased volume of e-commerce, card-not-present, and telecom transactions. It’s vital to protect your merchant accounts.

    Vesta offers cutting-edge technology to protect your company from e-commerce fraud. We have 25 years of experience with data collection, analysis, and model refinement. Our goal is to help you approve more purchases while preventing fraud.

    Contact us today to get the support your business needs.


    Contact Vesta


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