6 Ways to Protect Your Business From Payment Fraud

Doing what you can to avoid payment fraud can reduce the risk of financial loss. Our expert explains everything you need to know to protect your business.

Fighting fraud could be one of your business's biggest challenges. New online theft tactics seem to arise all the time, making it difficult to detect suspicious payment activity.

In this expert guide, we’ll explain the different types of payment fraud so you'll have the tools to raise a red flag when necessary. We also provide strategies your business can use to stay safe, going beyond the basics to help you exceed industry-standard security.


What Is Payment Fraud?

Payment fraud involves stealing money or property from a person or business through an illegal transaction. This type of fraud often takes place online and could include fake refund requests, bounced checks, stolen goods, unauthorized purchases, and fraudulent credit card transactions.

Both consumers and business owners experience the effects of payment fraud. If someone buys from your ecommerce shop with a stolen credit card, the cardowner may dispute the purchase with their card company. You'll be liable for the lost income along with expensive chargeback fees

Shielding your business from payment fraud improves your chances of long-term success.

Different Types of Payment Fraud

The most common forms of payment fraud include:

  • Card-present fraud: the use of a stolen credit card for an in-person transaction at a physical business
  • Card-not-present fraud: the use of a stolen credit card or card number for an online or phone purchase
  • Chargeback fraud: occurs when someone buys items with their own card, then falsely requests a chargeback so they can keep the items for free

6 Ways to Protect Your Business from Payment Fraud

A strong strategic approach can reduce your risk of payment fraud. We recommend these 6 safety tips for ecommerce businesses.

1. Maintain Separate Business Bank Accounts

You should always keep separate personal and business bank accounts to easily track expenses and income. If fraud affects one of these accounts, the other will stay safe. Having separate accounts also limits your personal liability for business debts and financial obligations (lawsuits, for example). 

Make sure both your personal and business accounts have strong security measures, like logging you out automatically after a period of inactivity. You should also establish a security policy for employees who use business accounts and add fraud protection to company credit cards. Sign up for online billing to prevent theft of paper account documents.

2. Review Statements Frequently

Keep tabs on your business accounts and look for transactions you don't recognize. Regularly reconcile credit card statements so you can identify and report potentially fraudulent purchases. 

If you see something that doesn't look right, make sure you check all your company accounts and systems so you can locate and fix the breach. Alert your payment service provider and financial institutes immediately if you think you've been impacted by fraud.

3. Implement Multi-Factor Authentication

Multi-factor authentication (MFA) ensures that people who enter credit card details on your site are the actual cardholders.

Pay.com supports 3D Secure 2.0 (3DS2) to protect your business from fraudulent transactions. This system keeps an eye on transactions and requests extra authentication when needed. For example, 3DS2 may take effect for purchases of unusually large amounts or from unexpected locations.

4. Stop Storing Credit Card Data

Never store customer payment details on your business servers. Doing so dramatically increases the risk of data theft and goes against industry security standards. Stolen credit card numbers can cost your company and your customers thousands of dollars. This type of breach also damages your business reputation.

When you work with Pay.com, you enjoy the benefits of our Level 1 PCI DSS compliance. We never store payment information on our platform, so credit card details stay safe. 

5. Keep Hard Copies Safe

Ecommerce transactions have an increased risk of payment fraud, but it can occur offline too. Paper checks, credit card statements, and bank account documents can all be stolen and used for payment fraud. Consider switching to electronic statements. If you need to print or store paper copies, get a good shredder and locked filing cabinets.

6. Tokenize Transactions

Pay.com takes security seriously with high-tech features like tokenization. This system encrypts payment details during transit, so even if a hacker intercepts the data, they won’t be able to read it and  steal credit card numbers. 

The Benefits of Working with Pay.com as Your Payment Service Provider 

Pay.com gives you a flexible payment infrastructure with built-in fraud protection. You won't have to handle industry security compliance on your own. We adhere to Level 1 of the PCI DSS with authentication and tokenization. 

Here are some more benefits of choosing Pay.com:

  • The ability to accept many different payment methods, including digital wallets, credit cards, debit cards, and bank transfers.
  • A powerful API that lets you embed our payment components into your own website or application
  • Transparent flat-rate fee structure designed to keep payment processing affordable
  • Detailed reporting with customer insights on your intuitive Pay Dashboard

Click here to get started with Pay.com now!

The Bottom Line 

Payment fraud protection is an ongoing concern for business owners. Although it can be challenging to stay on top of the countless types of fraudulent transactions and scams, you can reduce your risk of financial loss with these eight strategies.

Selecting a strong payment system gives you the advantage of solid fraud protection. Pay.com  has the innovative tools your business needs to fight fraud. We'll help you keep your customers’ details secure and prevent serious financial loss. Click here to create your account now!


What's the most secure way to accept online payments?

Pay.com lets you accept multiple payment methods, all protected with industry-leading security. You'll benefit from safety tech like data tokenization and multi-factor authentication. You can display the PCI DSS compliance badge on your checkout page to let your customers know you take their privacy seriously. Click here to get started now!

How can businesses protect themselves from payment fraud?

You can ensure the security of your payment system by working with Pay.com. Our solutions shield every transaction with high-tech tools like tokenization. We use 3DS2 to add a layer of card authentication for potentially suspicious transactions.

What are the most common types of payment fraud?

The most common types of payment fraud include card-not-present transactions involving a stolen credit card number used online or on the phone; card-present transactions, or the use of a stolen physical card at a physical store; and chargeback fraud, when customers say they didn't get the item or it was damaged so they can get their money back and keep products.

What is the safest way to receive money from a buyer?

Pay.com is the safest way to accept payments online. In addition to our Level 1 PCI DSS compliance, our 3D Secure 2.0 support adds a layer of authentication to unfamiliar transactions. Customers must confirm their identity through a unique text or email code.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
Protect Your Business from Payment Fraud

Pay.com is Level 1 PCI DSS compliant, which means that when you work with us, you don’t have to worry about meeting the requirements on your own. We support 3DS2 multi-factor authentication to protect your business from fraudulent transactions.

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