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CNP (Card-not-present) Fraud Cost the United Kingdom over £500 million Last Year

Many online customers do not see the danger in card-not-present payments— popularly known as CNP. They see it as the convenience of the digital payment era. All they have to do is to visit a store, type in a card number online or pay through a mobile app, and wait for their ordered item. 


But for retailers, sometimes the journey does not end here. In some instances, the legitimate card owner comes back to claim a charge alleging that their card was used to make the purchase without their consent.

The trend is becoming popular among customers, and the level of this specific type of fraud continues escalating triggered by digital cyber-criminal syndicates and the shift in traffic from physical stores to ecommerce retailers.

The Seriousness of the Matter

The fraud stands for 72 percent of all card-related crime. This digit has been rising steadily over the past decade, sending the impression that it will not fade away any soon. Last year, this line of attack led to 24% of losses within the 2017-2018 financial year. The United Kingdom lost a whopping £506 million to CNP.

From a sneak peek, we can tell that the rates of CNP cases are skyrocketing in the UK. Europe, as a whole, lost approximately £1.5 in 2016. Perhaps that explains the introduction of the new legislation called the PSD2 all over the continent. The laws seek to protect legitimate consumers who rely on third-party payment services. PDS2 has also triggered competition among fintech companies. However, a change in the law is not the reason ecommerce retailers should protect themselves against CNP.

What is Means to Retailers

For merchants, CNP fraud means a double loss:

Number one; customers who notice unfamiliar transactions in their bank statements can request a refund with their banks—known as a chargeback. But not all chargebacks are legitimate. Some shoppers claim even perfectly legit transactions buy directly approaching their banking partners instead of talking to the merchant who is not included in the whole procedure.

Two, anytime a merchant refuses to carry on with a transaction from a well-intentioned shopper because they suspect it is fraudulent, a business loses a chance to make sales. This unfortunate scenario is known as a ‘false decline’ and can be the reason a would-be buyer never revisits your store. It happens a lot of times; for instance, the United Kingdom found that 21% of all turned-down transactions were a false alarm. 20% of declines in the United States were false alarms while Europe, as a whole, noticed 14% false alarms. And the worst thing; the retailer could be chasing away every customer who walks away disappointed in because of a false decline.

The real cost of Card-not-present fraud goes past financial liability; businesses also lose customer trust. Today’s customers can ruin your reputation if you allow a fraudulent purchase with their cards. Though they know that the move to accept payments from their cards was unintentional, they can go public with these stories and ruin your brand’s reputation on social platforms.

What You Can Do

But business owners who are affected can rebuild this trust and build stronger defenses against fraud. Multi-factor verification is one way to avoid making mistakes. But this approach must also be used carefully because lengthy procedures can ruin CX.

Final Words

CNP fraud puts businesses in a dilemma to choose between the safety of their companies and their customers. The best approach for UK businesses is to put up strong defenses without annoying their customers.

Author Bio: Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. His understanding of the industry has helped thousands of companies get the best merchant services UK.
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