Do you Know Your Customer ?

Post 3 of 11

how to stop fradings in online payment businessAccepting payments online means that we don’t get to actually see the client, or “read” the magnetic strip of their Card. Virtually anyone can be on the other side of the internet, using whoever’s details.



K– Know             Y– your               C– customer

KYC is a set of documents meant to verify your client’s identity.


This is one main reason why you should collect these documents.

Another is to protect you in cases where there is any risk-issue.

Our risk department checks the data coming in every day, and locates different risk issues, on which we send alerts via email. In most cases the KYC can help you alleviate the risk issue and solve the case.

Another situation where KYC can assist is with chargebacks. While this set of documents is not enough to fight the chargeback by itself, it does support your case that you know the client, and the client knows you.


We recommend that you collect this set of documents as soon as the client has deposited with you for the first time, and before allowing the client to trade with this deposit.

If the client refuses to provide these documents, you would be better off refunding them and not working with them.


This set of documents include:


  1. Photocopy of the front side of the credit card. Make sure the first 12 digits are hidden. Make sure the client’s name and validity of the card are shown clearly.

front cc

  1. Photocopy of the back side of the credit card. Make sure the CVV is hidden and that the card is signed in the signature strip. This signature should be visible. Check to see the signature is not an obvious forgery. You can compare the signature to the one in the Passport or ID, and if you have the client’s signature on a form, compare it to that one as well.

back cc


  1. Photocopy of ID or passport, preferably with the client’s signature on it. Compare that signature to the one on the back of the card.

As an added value you can ask your client to photo himself holding the ID. This is on top of the ID photocopy, not instead.

drivers license back pass


  1. Proof of address. This needs to be a utility bill (not older than 3 months), such as Gas, Water, Electricity etc. The importance here is that it needs to be a utility that actually forced someone to physically go to the location to connect the service. That’s how we can be sure that the address is verified and true.


Terms and conditions

Most sites allow the client to tick a box saying he read and agrees with the T&C, while most of us know that they tick that box without bothering to actually read it.

To make a stronger case, make sure the client signs a document stating he has read and agreed to your terms and conditions, and that he understands the risks involved with trading with you.

If possible, you want this to be an actual signature, not electronic.

This is also a document you should add to your disputes in case of CBs.


Letter of confirmation on every transaction

To better protect yourselves against CBs where the client claims he does not recognize or did not authorize the transaction, you want to have him sign on each and every transaction he deposited with you.

You can have a form ready, with a table of his transactions, but make sure he signs next to each transaction.

A general form stating he approves all his transactions with you will not support your cases.

A form where the transactions show on one page and the client’s signature in on the other – will not be able to be used as a valid protection against CBs.

A form that has a list of transactions, with the client’s signature below will not be accepted, and claim will be that you might add transactions to that list after he signed.

If your client refuses to sign – this might indicate a fraudulent client.


Service approval

It’s generally known that protecting yourselves against “service” chargebacks is very hard.

How can you prove that the client actually received the service? That it was “as described”?

This is when you need to get creative.

We suggest that you call your clients periodically. Record all calls, and in them ask your clients a series of questions regarding the service. Are they happy with the service they received? Was it what they expected to receive? Is there anything else you can do to increase their satisfaction with you as a merchant and with your services?

These are just a few suggestions that MAY help. Be creative and make a list of questions that will cover the issue of service.

There is no guarantee that even with these recorded calls you can win Service CBs, but we see only added value to these phone calls.

The client will feel important and valued, you will have the chance to right some wrongs if the client is unhappy with you, and knowing there is a communication with you might cause your client to reach out to you in future issues instead of processing a CB.


If you think of other creative ideas you believe may help, we will appreciate you sharing it with us.


Checking the use of cards

You need to make sure that only one person is using a specific card, and that he is indeed the card owner. Collecting the KYC will make this check an easy task.

If you have a case where a person who is NOT the cardholder used the card, you should have a written and signed approval from the cardholder allowing this individual the use of their card.




Potential warning signs of fraud

  1. First Time Client – Fraudsters are always looking for new markets to exploit. Since you have no history or knowledge on the client you need to be on the lookout. Don’t allow first time clients to deposit extremely large sums of money or perform multiple payments. Better be safe than sorry.
  2. Larger than normal orders in a short period of time– Because stolen cards have a limited time when they are still active, a fraudulent client will want to deposit as much as possible in a very short time.
  3. Inconsistencies – when a client deposits several times and the data in those deposits does not match. This data can be client’s name, email address, shipping address, zip code, country etc. It is very important to have clients use their REAL information in each transaction.
  4. Multiple cards used with a single email – Clients will have a certain amount of cards, usually 2-3. When you see a client using a large number of cards from the same email address, this might indicate the use of stolen cards.
  5. Multiple emails used with a single card – this might indicate different people using the same credit card – which is not allowed.
  6. Client using cards from several different countries (BIN country) – BIN (Bank Identification Number) is the first 6 digits of the card number. It is a code that contains the identity of the bank, branch, account, country etc. When you have a client using different cards with different BINs this might indicate fraudulent activity.
  7. Client processing from different IPs from different countries over a short period of time (up to 24 hours) –When a client is changing IP country few times over a short period of time, and it is clear that he didn’t actually travel to the different country (for lack of time) – this might indicate a fraudulent activity.





This article was written by admin_algocharge