Comment by tgflynn
3 years ago
If it's the merchants who carry the burden of credit card fraud why is it that almost all fraud prevention efforts seem to be done by banks/card issuers rather than by merchants ?
Except for a small number of cases involving pre-paid cards, I have never seen a merchant refuse to accept a valid credit card payment for an online purchase. I have however encountered and heard of cases of banks declining transactions they considered possibly fraudulent.
Because the card services are in the business of selling their service to merchants in exchange for a fee, and they have competition in that space. Merchants will (in theory) refuse to work with - or pay as much to - a card service which does insufficient work to prevent fraud.
That explanation doesn't make sense because the fraud prevention/transaction denials are being done by the card holders bank, not by the merchant or payment processor and merchants don't get to decide what issuing banks they will be doing business with. For the most part they either have to accept all Visa cards or none (except maybe for some very broad categories like country of origin or pre-paid vs. non pre-paid).