Credit Card Fraud is on the Rise

As New Zealand increasingly moves towards becoming a cashless society the number of transactions made on credit cards has risen to staggering proportions. If you are a merchant who offers credit card facilities you need to protect yourself from credit card fraud.

As a merchant you can be held liable for credit card fraud that takes place at your place of business. Merchants who fail to take adequate precautions or who neglect to check the validity of a credit card may suffer a chargeback for the transaction.


If a cardholder or the issuing bank disputes a transaction and that dispute is upheld, the value of the transaction can be “charged back” to the merchant. When this happens the merchant loses the value of the sale and has his settlement account debited. In addition, the merchant may also be charged a chargeback fee.

Ensuring that every credit card presented as payment for a transaction is thoroughly checked for validity is one way of reducing the chances of a chargeback.

Checking Credit Card Validity

Though there are may different credit card scams, the most basic line of protection against card fraud when a card is presented is to ensure that the credit card is genuine and that it is being presented by its rightful owner.

Checking a Credit Card

These simple tips will help you identify a fraudulent credit card.

  • The details of the card such as name, account number and expiry date should be embossed. All numbers should be the same size and in the same font. Check that the embossing has not been altered in any way.
  • The cardholder’s name must be present on the front of the card.
  • The card must carry an expiry date. Is the card still valid?
  • Credit cards carry security holograms. Is the hologram correct? Visa uses a flying dove, MasterCard uses two interlocking globes.
  • The hologram may be on the front or the back of the card. In either case, the hologram should be embossed with the last four digits of the account number.
  • Look at the first four embossed digits of the account number – directly below these you should see a four digit printed number. Do the two sets of numbers match exactly?
  • All Visa account numbers should start with a 4. All MasterCard account numbers should start with a 5.
  • The rear of the card should bear a magnetic strip.
  • There should be a signature panel printed with a repeated diagonal pattern and bearing the cardholder’s signature.
  • At the end of the signature panel there should be a four digit number which exactly matches the last four digits of the account number. This should be followed by a three digit security code.
  • Check for tampering or alteration on any part of the card.

Vigilance Will Save You Money

By performing the simple physical checks listed above you’ll be far less likely to accept a fraudulent credit card as payment for a transaction. And by accepting only valid credit cards you’ll avoid losing the value of the sale and those nasty chargeback fees.

How to Identify a Fraudulent Credit Card, 5.0 out of 5 based on 1 rating

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