Cybersecurity is one of the most important ecommerce features. Without the proper protocols, online store owners put themselves and their customers at risk for payment fraud. Even small stores that cater to a niche audience can find themselves at a heightened risk if they leave gaps in their online security. In fact, smaller stores face the greatest threat from cycbercriminals because of insufficient Internet safety. Small stores still have a large amount of sensitive information. One in 5 small online businesses falls victim to fraud every year, and 60 of these stores are forced to close within six months (1). Not only is hacking a huge risk for online retailers, but accepting a fraudulent payment is dangerous as well because owners will have to refund the charges.

Outside of financial consequences, data breaches harm an online store's reputation. Loyal customers are reluctant to continue shopping at an online store that put their information at risk in the past. Using the right tools minimizes the risks of fraud.

What can online store owners do to strengthen their websites' security?

Most ecommerce software platforms have a number of built-in security features. Being prepared for risks is a crucial part of mitigating online threats. Here are some ways online store owners prevent payment fraud and data breaches:

  • Set limits: Depending on your individual business and target customers, setting a payment limit from one account is useful. This prevents merchants from processing potentially fraudulent transactions (2).
  • Monitor all transactions: Owners have a strong knowledge of their stores. Billing and shipping addresses that don't match are often a warning sign of fraudulent activity. Physical location of customers provides an indication of whether the transaction is legitimate. Ecommerce software offers IP address tracking so merchants are able to block transactions from risky countries. There is a higher incidence of fraud from consumers with emails issued by free service providers as well.
  • Update ecommerce software regularly: Software providers issue frequent updates that fix any holes in their platforms. Store owners need to install these to close vulnerabilities from new viruses and malware. Ecommerce stores should utilize a business-grade anti-malware software to protect themselves. Hosted platforms often issue automatic updates to prevent new vulnerabilities.
  • Utilize the Address Verification System: AVS compares the billing address the customer entered with the one the credit card issuer has on file. Most payment processors offer this feature. It separates legitimate transactions from fraudulent ones.
  • Require CVV: Card Verification Value is the three- or four-digit code on the back of a credit card. Under PCI standards, retailers are not allowed to store this number, even if they record customers' names, addresses and credit card numbers for future transactions. Additionally, many cybercriminals have a credit card number, but not the physical card. A CVV requirement makes it much more difficult for a fraudulent transaction to go through.
  • Require stronger passwords: Hackers use algorithms that generate customers' passwords. These programs run through all the possible combinations for a four-digit password, so it would not take long to find the right alpha-numeric password. Longer passwords with at least one special character and a capitalization are more secure. If implementing stricter password standards, let customers know it's for their protection.
  • Conduct a risk assessment: There are security areas online store owners don't think about every day. Store owners need to understand which types of data are at the most risk and the kinds of systems they can implement to prevent online fraud (1).

Security is crucial for running an online business.

1. Experian Data Breach Resolution Advises Small Businesses to Be Prepared for a Data Breach
2. 6 Tips to Protect Your Online Store from Fraud and Digital Threats

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