Can Smartphones Reduce Card-Not-Present Fraud for Online Subscriptions?

Subscription and membership sites are particularly susceptible to online fraud, basically because card-not-present (CNP) transactions make it easy for fraudsters to engage in carding practices. This can be problematic for subscription sites as it increases chargeback rates and may decrease a merchant’s standing with credit card companies.But a new authentication program may help subscription and membership sites provide reduce CNP fraud. SafePay will send customers an authentication PIN to their smartphone device via an app. This is more secure than onscreen verification techniques since it requires a second device.There are two potential drawbacks: One, there may be an increase in form abandons among customers who do not have their phone on them when signing up for a subscription. And two, the verification requires a smartphone and downloading an app (albeit free). Many sites may be better off just setting up SMS technology that lets them send a text with an authentication code to any mobile phone.For more tips on how you can reduce your chargeback rates and minimize CNP fraud, check out this handy how-to on our sister site, Subscription Site Insider.

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