1. Merchant informs the payment processing service to settle transactions 2. Payment processing service sends transaction information to the processor 3. Processor checks the information and forwards settled transaction information to the issuing bank 4. Issuing bank transfers funds to the processor 5. Processor routes funds to the acquiring bank 6. Acquiring bank credits merchant’s bank account 7. Issuing bank includes merchant’s charge on customer’s credit card account
2 Account Level Make sure only authorized users have access to your payment gateway account, and be alert for suspicious account access patterns.
3 Network Level Ensure your perimeter is defended against unauthorized access.
PayPal Shopping Cart Software
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How to Protect Your Business Against Fraud
1 Transaction Level Ensure each transaction you accept and process is valid, and be careful in reviewing suspicious transactions because some may be valid.
PayPal Shopping Cart Software
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Your Disclosure Policy Tells Customers that You Are Honest and Dependable
1 Business Description – Explains what the company does
PayPal Shopping Cart Software
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Settlement Process
Payment Processing
Service
2
1
Merchant
Customer
Processor
7 3 4 Customer’s
issuing bank
5
Merchant’s
6
acquiring bank
PayPal Shopping Cart Software
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Compliance with PCI Data Security StandardHale Waihona Puke Must Be Followed
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The PayPal Opportunity
PayPal is the safer, easier way to get paid by online shoppers around the world.
Accessing payment networks
Identity theft
Accessing a payment network to complete fraud
Using stolen information to open new credit cards
Cash theft
Issuing unauthorized credits or payments
…leading to losses
► An estimated $2.8B USD was lost to online fraud in the U.S. and Canada in 2005
► The rate of credit card fraud for online sales is three to four times higher than the overall fraud rate
Vulnerabilities abound…
► Authentication is a challenge
► Hackers can break into a merchant’s network
► Hackers can also steal customer identities
► Multiple access points for break-ins
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PayPal Growth
► 141M accounts ► 31% yoy volume growth ► 190 countries ► 70+ currencies ► 1000s of merchants add
PayPal every year
PayPal
helps you grow your business
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Understanding the Payment Processing Network
Individuals
► Merchant – seller of goods
► Customer – buyer of goods
Institutions
► Customer’s Issuing Bank – provides customer’s credit card information and verification
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The Payment Network Provides Processes and Services
Processes
► Authorization – the process of verifying a customer’s credit card
Services
► Settlement – the process of collecting funds from the customer’s account
PayPal Shopping Cart Software
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Common Fraud-Related Risks
Product theft
Using a stolen credit card to purchase goods and services
Chargebacks
A cardholder disputes a credit card purchase
PayPal Shopping Cart Software
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Authorization Process
Payment Processing
Service
27
Merchant
8
3
6
45
Customer’s issuing bank
Customer 1
Processor
1. Customer decides to make an online purchase and inputs credit card information 2. Merchant’s website receives customer information and sends it to a payment processing service 3. Payment processing service routes information to processor 4. Processor routes information to bank that issued customer’s credit card (issuing bank) 5. Issuing bank sends authorization (or declination) to processor 6. Processor routes transaction results to payment processing service 7. Payment processing service sends results to merchant 8. Merchant decides to accept or reject purchase
► Payment Processing Service – connects merchants, customers, and banks through secure online transactions.
► Gateway – the secure pipe between the banks and the processor