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Protecting Your Credit Card Reader From Fraud

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Nic Beique | December 23, 2016

“There have been increased incidents of fraudsters abusing credit and debit card terminals. Here are some ways to protect your business from terminal fraud. (Updated 2022.)”
4 min read
Content

    There have been increased incidents of fraudsters abusing credit and debit card terminals during the checkout process.

    Fraudsters are always looking for opportunities to steal information or create fraudulent transactions- here's one way to protect yourself from in-person fraud and prevent your credit and debit card reader from abuse and tampering.Below are some common ways you can protect your business from terminal fraud.

    1. Adding a password to your payment terminal

    his is probably the most important step to protecting your business from payment terminal-based fraud. Credit card machines often come from the factory programmed with a default password which is usually similar across all models of machines. This means that many people know the default password for the machines and can use it to commit fraud against your business.

    The simple process of entering a custom password for your machine can eliminate almost all risk of terminal-based fraud. In the most common cases, fraudsters will try using the default password to access restricted functions.

    When you set a custom password, potential fraudsters would need to know your unique, individual password to perform these functions, rather than the generic, well-known default passwords. In short — default passwords afford little protection or peace of mind.

    2. Keep an Eye on Your POS equipment

    When a customer is using your card reader to pay for their purchase, try not to become distracted and pay attention to ensure that they do not conduct any suspicious activity. A customer that uses an unusual number of keystrokes (excessive button pushing) should be treated as suspicious for example.

    The most common cases are fraudsters quickly canceling a transaction using the menu options, and starting a new transaction such as a refund, void or sale for a small amount. Merchants should ensure that there is nothing out of the ordinary being done to the terminal during a transaction by the customer and never leave your POS device unattended with a customer. 

    3. Always Ask for a Chip Card

    One of the easiest ways to prevent fraud is to ensure that your customers are using chip cards over swipe when paying for transactions. Chip cards in most cases shift the liability away from your business and to the bank. If your customer has a card that can only be swiped, you may want to verify their ID or withhold the transaction especially since most new terminals can't even accept these transaction types anymore.

    Tap is more secure than swipe because it requires NFC technology either using the chip from the card or using tokenized information through contactless payment methods such as Apple or Google Pay.

    4. Check the Receipt

    When completing the transaction, be sure to check the top of the receipt for the transaction type that was just processed. Make sure that the transaction type matches what you had processed, whether it is a sale, refund, pre-authorization or otherwise.

    Try to keep the cashier's copy of the receipt to settle your books at the end of the night which we will discuss in the next section.

    fraudster running away with a credit card

    5. Practice frequent book keeping hygiene

    There are a few things you should be doing everyday before you close up your business for the night.

    These include:

    • Balancing your transactions and checking to make sure that your daily batches and summaries you print from your terminal match your totals on your POS system. If your numbers for any card brand are off, that is an indication something went wrong. You can then deduce whether a transaction was recorded wrong, you accidentally charged or refunded a customer, charged them the wrong amount, or there was some funny business going on.

    • Settling your transactions batches every day. By settling the transactions at the end of the day after you've balanced them with your POS statement, you ensure that the transaction amounts for that day have been recorded and sent to your processor to be processed. That way, you have a clean slate to reference your books for the next day, but also protect the transactions from the previous day from being voided or tampered with.

    Prevent point of sale fraud from happening to you

    Card-present fraud is a serious issue that can cost your business money. But by following some simple steps, you can protect yourself and your customers from becoming a victim of this type of fraud. Make sure to add a password to your terminal and keep an eye on it while it's in use. Additionally, only accept secure debit or credit card transactions – tap, or chip and PIN are more secure than Swipe– and check your receipts against the transactions that actually take place to ensure accuracy. If you practice frequent bookkeeping habits, you'll be able to catch any discrepancies right away and prevent fraudulent charges, or subsequent chargebacks, from happening in the first place. Implement these tips today to help keep your card reader safe from criminals looking to exploit your business!

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