Credit card fraud – are you at risk?

Digital crime continues to rise and changes at a rapid rate. Without the appropriate security measures, the same technology that allows us to lead a more comfortable and convenient life can also make it easier for scammers and fraudsters to do their work. Does your business have all bases covered when it comes to fraud prevention?

What is Card Fraud

Any kind of deceitful action aiming for a financial or personal gain is considered to be a fraud. When talking about credit or debit cards, which will be the focus of this article, it relates to when transactions are fraudulently committed to gain either money or goods through a marketplace or platform. The three core types of fraud are:

CNP – Card Not Present

Happens when stolen card details are used to make a purchase. CNP accounts for 78% of all fraud on Australian cards for a total of $417.6 million in reported in the the APCA fraud details & data 2017.

Shill Bidding

The same person operates as both the buyer and seller to syphon funds off stolen cards. Funds are paid out to a bank account often opened using stolen or fake identities and the fraudster will withdraw the funds as soon as they clear making it impossible to recover or trace.

Friendly Fraud

The genuine cardholder attempts to get their money back after the goods/services are received.  (see below for different ways this actually happens, i.e. a chargeback.)


What is a Chargeback

A Chargeback is the return of funds to a consumer, initiated by a bank and it exists to protect the consumer. Common situations in which chargebacks happen are:

    • A consumer has a card stolen and later sees a transaction he didn’t make. The consumer may contact the bank to initiate a chargeback and the amount will be removed from the consumers’ card.
    • A chargeback can also be requested, even if the card hasn’t been stolen or lost. As mentioned above, this is often referred to as ‘friendly fraud’ because the intention isn’t malicious. Common cases are when the consumer simply can’t recognise the merchant’s name on the statement or a family member used the card and hasn’t communicated it.
    • A different scenario is created when the consumer decides they don’t like the product and go directly to the bank instead of returning the product to the merchant,  also initiating a chargeback. Something similar can be done with malicious intent when the consumer doesn’t want to pay for the product and claim they didn’t receive it.  
How To Calculate Your Chargeback Rate 


Your Ideal Chargeback Rate


Your Experience of Chargebacks 

The merchant (seller) is charged a fee by the bank, lose the cost of the merchandise and what they have put into shipping. There might also be losses on fees associated with currency conversion. Merchants can dispute the chargeback although appropriate evidence will be required.


Chargebacks happen to all merchants but should be minimised due to its potentially high impact on business revenue and resourcing.

Assembly Payments are the only provider of merchant services that offers a solution for its customers that completely protects your business from both fraud and chargebacks. Contact us today to find out more.