The Internet is currently rife with fraud. The PwC’s Global Economic and Fraud Survey 2020, in fact, states that 47% of organizations suffered from fraud in the past two years. Given the state of the global Web landscape, companies surely want to keep up with the latest ways to thwart fraudulent transactions and other related activities effectively.

This article helps with just that—giving Internet merchants five ways to combat the ever-growing number of threats to their business, specifically credit card fraud, with the help of an IP geolocation database.

1. Identify and Manage Risks

The first step in solving any problem is to identify it. Companies need to know what the problem’s source is. One way to do that is to analyze attempts or attacks and discover commonalities, such as what countries their perpetrators came from. This is where IP geolocation can support with a good level of accuracy.

By looking at network logs, investigators can gather attack-related IP addresses and identify likely threat sources that they can then monitor more strictly or even block. An IP geolocation database provides an IP address’s country and other information. So, if investigators notice a vast number of fraud attempts and attacks from an off-shore country, but their organization doesn’t do much business there, they can choose to block all incoming connections from the country to reduce risks.

2. Expand Threat Defense Portfolio

No single solution or system can thwart fraud. Attempts and attacks can come from internal and external sources, so companies must monitor all access points. Apart from utilizing anti-malware and firewall solutions, you can feed security systems and applications with additional threat intelligence, such as IP geolocation data.

Every user is assigned an IP address when he/she accesses the Internet. So organizations can, at least to some extent, track website visitors, customers, and even employees who engage in transactions on their digital platforms.

An IP geolocation database can clue security personnel into any user’s physical location and use that information to confirm one’s identity and deny access to unauthorized entities if necessary before they can inflict damage.

3. Strengthen UAC Strategies

Some 37% of fraud comes from internal sources, including members of middle and senior management and operations staff.

IP geolocation can limit who in your network has access to the organization’s financial assets, thus reducing the likelihood of internal fraud. Security teams can identify employees via their IP addresses to implement more stringent user access control (UAC) measures. Those who are not authorized to use corporate-issued credit cards can thus be stopped should they try to do so.

4. Cater Only to Authorized Subscribers

Content providers can limit their potential attack surfaces by implementing strict digital rights management (DRM) protocols. Counterchecking subscribers’ IP addresses each time they log in to services with those on record can reduce the companies’ chances of getting robbed of copyrighted content and other assets.

An IP geolocation database can serve as an additional layer of fraud protection. By comparing a customer’s IP address details at the time of transaction with his/her credit card billing address saved in the client database, exposure to fraud is lessened.

5. Detect Fraudulent Transactions as They Happen

While credit card payment reversal is one way to avoid losing customers when a fraudulent transaction occurs, the process can be costly to digital merchants. Chargeback fees range between US$20 and US$100 per sale, which can add to costs that, let’s face it, not all retailers can afford.

Such fees are avoidable, though, if retailers include IP geolocation checks in their real-time payment processing. Integrating an IP geolocation database into payment portals can alert processors when a customer’s IP address doesn’t coincide with his/her credit card billing address. When that happens, a confirmation call with the customer can limit the merchant’s chances of approving an unauthorized sale.

The Bottom Line

Internet merchants are some of the most lucrative attack targets. Along with financial service providers, they suffer most from the top fraud type—consumer fraud. But as we’ve shown, e-commerce retailers can fight back with the help of less-known anti-credit card fraud technologies, such as IP geolocation.