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Published by Robert Coles on 09.11.2009 in and previewed 65 times


Today, merchants have the opportunity to conquer the world. They can opt to conduct business beyond the limits of geography and expand their horizons to accommodate foreign markets. International transactions are undoubtedly an excellent way to expand your customer base, and your business altogether.

However, every merchant should know that a good majority of online fraud and a good number of chargebacks occur with international credit card transactions.

Accepting international transactions will entail significant risks. First, offshore transactions may not support proper address verification systems. Credit cards by American Express, however, do have an overseas verification system, where you can verify whether the billing address matches or not, by calling their international verification department. Unfortunately, for most other credit cards, there is no established worldwide AVS system yet.

International transactions are downright risky. There is no assurance that you will get the payment once shipped. There is also no way for you to retrieve the merchandise once the items have been shipped out of the country. Moreover, there are great chances that the credit card used for payment is invalid, more so if stolen (which will result to a chargeback with you on the losing end). There are equal chances for the shipment to get damaged during transit, or the chances that your buyer may never receive the item, or at least confirm that they did. However, there are precautions that you can take in order to avoid these issues.

There are warning signs that you need to be very careful about when dealing with international transactions. Take special care when it comes to overnight shipping requests, as these are the most prone to fraud. Also, there are countries which are considered to be high-risk when it comes to international orders. These include countries like Indonesia, Nigeria, Malaysia, Pakistan, Israel, Egypt, Benin and countries in Eastern Europe.

In high risk cases like this, it may be best to spend a little for an overseas call to the card-issuing bank, to confirm whether the billing address provided actually matches that of the card. You should be on the lookout when the shipping address provided is different from the billing address, and confirm it with the buyer. Consider that contacting customers or issuing banks are not as expensive, when compared to the possible financial risks you will face if your buyer proves to be fraudulent. Another effective strategy that you can use is to ask the customer to contact you via telephone or e-mail to find out about your shipping costs. From a fraudster's point of view, this can be a little too much effort, so they most likely will decide to make trouble elsewhere. Also, it is imperative that you use a traceable shipment method, and be sure to obtain a signature as soon as the item is received.

Remember that international transactions are the worst form of CNP transactions - the cardholder is not only not physically present, but could be thousands of miles away. As the merchant, you are offered the least security if the credit card turns out to be stolen. When worst comes to worst, you will end up losing the merchandise, refunding the amount to the cardholder, and paying for the chargeback fee.

As far as chargebacks are concerned, there is only one thing new worth mentioning in relation to international transactions. Chargeback fees for international transactions have augmented rates to cover the increased expenses for communication and correspondence.

For credit card companies, if no verification means are used, the only option to recover the fees will be to contact the local law enforcement. However, note that the lack of fraud measures worldwide has set many fraudsters running and going elsewhere for more. Moreover, once there are product disputes (whether or not the transaction was fraudulent), there right be very slim chances of re-covering the payment and fees involved in the transaction.

If you are a small business and you operate with slim profit margins, unless you are really sure about the authenticity of the transaction, it may be wise to avoid international transactions altogether. The risk maybe way too much to tolerate.

About Author

Robert is a professional at preCharge Risk Management Solutions . For more information and advice on chargebacks and related payment topics join the Chargeback Forum today.

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