Digital Battlefield: The Ongoing Fight Between Retailers and Hackers

The weekend that retailers and shoppers have been waiting for has finally arrived. Bargain hunters everywhere will be waiting in line and logging on to find the best deals available between Black Friday and Cyber Monday. Unfortunately, with all that excitement also comes a very high threat of credit card fraud.

Sellers are certainly doing their part to play defense in this game of digital cat-and-mouse. eCommerce merchants spend more than 7% of their total annual revenue combating fraud, according to a recent report by InternetRetailer. That’s a pretty large amount of money devoted to trying to stop cyber-thieves who always seem to be two steps ahead of the good guys.

As online and mobile sales continue to rise, so does the fraud total involving sales categorized as card-not-present, or CNP. This refers to any sales that are made to consumers who are not physically there to hand over their credit cards, either by computer, smartphone, tablet, phone call, or fax. The hackers take full advantage of CNP purchases, to the tune of what is expected to jump to an estimated $6.4 billion by 2018.

This may sound all bad, and for retailers, it’s obviously a costly part of doing business. Buyers, though, also have technology on their side. While chip credit cards are helping to curb fraud at brick-and-mortar stores, online merchants aren’t just sitting back and ignoring the problem. Sellers are using everything from fraud detection software and two-step verification to data encryption to protect their customers.

Tokenization is also making it much harder for hackers to get access to cardholder information. Tokenization systems convert your credit card number into randomly-generated values that protect your data. More simply, your financial info is never transmitted after you make a purchase. Instead, a random series of letters and numbers is used to represent your credit card number, which means hackers never get the chance to steal any meaningful data.

In a recent research report by Worldpay, 59% of merchants say they think mobile transactions bring more risk of fraud. This makes plenty of sense, but despite the concern, a whopping two-thirds of those same survey respondents say they don’t treat mobile transactions any differently from others. One could see this as indifference or even arrogance on the part of the sellers, but the optimistic view is that it means they’re working just as hard to make it safer for you to shop across all possible platforms.

Banks are also protecting consumers as best they can, detecting potentially fraudulent activity and keeping customers from being liable for those transactions. Most financial institutions are quick to issue new credit cards and replace your money whenever your account is hit with bad charges.

Bottom line: there is no reason to change your shopping habits this holiday season. Stay vigilant and look out for yourself, but be thankful that banks and retailers are doing everything they can to protect your money, as well as their own.