According to estimates for 2021, over 2.14 billion people worldwide were expected to buy goods and services online. Given the enormous volume of credit card transactions taking place on the internet, it’s important to know how to increase online payment security to protect your customers and your business.
What Is a Card Security Code (CSC)?
As the name implies, a card security code (CSC) is a security feature placed on a credit card, complementary to the credit card number. It’s one of the most fundamental weapons in an anti-fraud struggle that every merchant running an online business should equip themselves with.
Why do we refer to online businesses? Because, as a rule, a card security code is necessary for card-not-present (CNP) transactions only, where it plays a crucial role in the authentication of the purchase.
Where to Find Your Card Security Code?
Depending on the credit card issuer and network, you may find it on either the back or front of your credit card. It’s worth noting that your CSC won’t be embossed or engraved like the card number.
Look for the three-or-four-digit flat-printed number. The most popular card networks — Visa and Mastercard — use a three-digit code printed on the back of the card, while American Express uses a four-digit code visible on the front face of the card above the card number.
CVV2, CVC2, CSC, or Simply CID?
Which abbreviation is correct? All of them are accurate since it depends on the card network and their proprietary name for the card security code.
Visa’s terminology describes the code as a Card Verification Value 2 (CVV2), Mastercard uses the term Card Validation Code 2 (CVC2), and American Express uses the name Card Identification Number (CID).
In a nutshell, it doesn’t matter what we call it. What matters is that these three-or-four-digit numbers visibly increase the security of online, CNP transactions and reduce the risk of potential chargebacks.
What Is the Purpose of a Card Security Code?
Since it’s impossible to physically swipe a card when shopping online, securing a transaction with the card security code is a reasonable alternative allowing the merchant to identify and verify the cardholder.
These three-or-four-digits make online purchases more secure. A typical credit card holds three information fields:
- Bank card number
- Signature magnetic strip
- Card security code (CSC)
The CSC is vital when it comes to online shopping. It’s the key to the cardholders’ money; therefore, they should keep it to themselves only. The code confirms that the person on the other end of a transaction is in physical possession of the card being used. Needless to say, the cardholder should be the sole person with access to the code.
When Is the Code Necessary?
The customer has to enter their CSC at checkout when confirming CNP transactions. Once the customer provides the code, it’s encrypted during checkout to confirm that the buyer can use this particular credit card.
Although lots of credit card data is available online, it’s usually just electronic data, not physical cards. This means fraudsters lack the particular cards’ security codes. Since merchants do not keep CSCs on file, there’s no risk of their breach, even in the event of cards’ data leakage.
Thus, this additional security measure can make a big difference in the security of CNP transactions by making them far less likely to be fraudulent.
Card security codes should be kept secret and never used on insecure web pages or shared in email or phone conversations. They also should not be shared with third parties.
Protect Customers’ Money to Protect Yours
Due to the high popularity of credit card payments, the risk of card scams is also significant. Fraudsters are innovative and go to great lengths to phish credit card data or duplicate cards to cash in on unaware customers.
In the aftermath, chargebacks occur. As might be expected, merchants are the ones who incur the majority of the resulting costs. That’s why it’s puzzling that some merchants are still reluctant to increase the security of transactions by adding CSC verification to their checkout process.
This choice might seem to simplify the customer’s journey, but in the end, all it does is reduce their protection from fraud. Make sure to keep your guard up and get ready for an anti-fraud battle.
To avoid jeopardizing your reputation (and money), it’s a good idea to implement multiple security layers boosting online payment protection. The better you protect your customers’ money, the lower the risk of chargebacks for your business.
Of course, the card security code authorization won’t fully prevent fraud on its own. However, it’s a great extra layer of security protecting online payments from fraud and scams.
Can a Card Security Code Eliminate Chargebacks?
To some extent, yes. Undoubtedly, requiring the CSC code for every CNP transaction increases online shopping security and limits the risk of fraud. However, despite the high effectiveness of this security layer, there are still some loopholes and room for improvement from the merchants’ perspective.
Sometimes the transaction doesn’t trigger warnings, but a chargeback may still appear. The following are a few reasons that this might occur:
- The transaction was confirmed with a lost or stolen card, meaning the fraudster had the CSC. In this case, the cardholder will definitely file a chargeback.
- A friend or family member made the transaction without the cardholder’s knowledge.
- The cardholder may not recognize the transaction on their statement.
- The cardholder’s intention from the very beginning was cyber shoplifting.
There is no perfect solution. Nevertheless, this is an important additional layer of security. By far, the best way to protect your business from chargebacks is to combine a variety of interlocking fraud protection mechanisms.
Anti-Fraud Protection or Flawless Purchasing Experience?
Merchants shouldn’t have to choose between these two options. Customers want a flawless user experience, a smooth purchasing path, and effortless checkout. But, at the same time, they expect a high level of security regarding their money, data, and payments.
Hence, your approach to business security must combine various tools, mechanisms, and multiple security layers. Below you’ll find some best practices worth implementing to ensure customers that their data and money are in good hands:
- Make your website secure and use an HTTPS interface.
- Avoid collecting your customers’ data on unsecured devices.
- Never store your customers’ CSC data.
- Use a combination of interlocking fraud-prevention tools (i.e., 3DS2, AVS, geolocation, velocity limits, etc.).
- Ensure that your software is up-to-date so fraudsters can’t find any loopholes in your security systems.
- Don’t skimp on your customer service — it’s much cheaper to deal with customers (even difficult ones) than it is to dispute chargebacks later on.
As mentioned, asking for the CSC during checkout isn’t a worldwide standard, unfortunately.
The good news is that more and more customers have become risk-conscious and unwilling to share their money with fraudsters or scammers. As a result, they prefer making their purchases on well-secured websites, even if it takes a moment longer.
Still, it’s up to merchants to increase transaction security. If you value security (yours and your customers), you’ll ask for the card security code during the checkout on your website.