Today, Card Not Present (CNP) fraud is the most common type of card fraud worldwide. It poses significant threats to businesses that process remote payments via credit or debit card. In the UK alone, more than 80% of reported card fraud losses in 2022 came from various forms of card not present fraud, according to UK Finance .

Despite the availability of security measures to mitigate the risk, the ever-evolving sophistication and security landscape necessitates a proactive approach from business owners to combat cybercriminals.

Card not present (CNP) fraud involves fraudulent transactions where a physical card is not presented to the merchant. It encompasses various scenarios, including e-commerce purchases and payments made over the phone.

Because CNP fraud only requires access to card information rather than the physical card itself, it is easier for fraudsters to perpetrate and challenging for merchants to detect. Consequently, CNP fraud accounts for a significant portion of all credit card fraud, posing a substantial threat to businesses of all sizes.

The severe impacts of CNP fraud on businesses and their customers

As well as being distressing for consumers, card not present fraud costs business in an increasing number of ways:

• Financial Losses: Merchants are often held responsible for chargebacks resulting from fraudulent transactions, leading to direct financial losses.
• Reputational Damage: Being associated with criminal card payments can tarnish a business' reputation, decreasing trust and loyalty among consumers.
• Operational Challenges: Dealing with fraud investigations and chargebacks can drain resources and divert attention from core business operations. This increases the workload of both the due diligence team, as well as the customer service team.
• Increased Insurance Premiums: Making claims for CNP fraud incidents can raise insurance premiums in the future.
• Legal Risks: Failure to demonstrate full due diligence processes may result in costly legal action on top of costly (and potentially recurring) fines.

How Semla can help retail brands fight fraud

To combat these challenges, businesses must adopt advanced fraud-fighting technologies, such as Semla. Semla significantly reduces CNP fraud, refund costs & reputational risk by automating CNP due diligence processes via secure PSD2 processes.

By leveraging secure PSD2 processes and next-gen technologies, Semla automates the verification of payment cards, ensuring refunds and purchases are issued only to legitimate account holders.

By doing this, paperwork related to due diligence can be cut, as well as alleviating the burden on already overstretched customer service teams.

Semla's solutions not only reduce the risk of fraud but also protect businesses from being exploited for money laundering activities.

As the increase of fraud is only set to increase, brands must act now to protect their business.

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