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Can credit card fraud be minimised with IP geolocation

Today’s online landscape has created many opportunities for both consumers and businesses. Its interconnectivity means that users are able to communicate directly with organisations, make purchase decisions on the fly and share opinions freely. Unfortunately, it also opens the door for certain individuals/entities to take advantage of all this information and activity.

Among the myriad of online security problems that exist, credit card fraud is among the most serious and frequent. It’s a major threat to e-commerce websites as data breaches of this nature not only drive away users from your site - and affect e-commerce activities in general - but also perpetuates the idea that online transactions are inherently unsafe, driving business away from the e-commerce marketplace.

So, it stands to reason that the threat of credit card fraud should be minimised as much as possible. But how? In this post, we show you how  IP geolocation might just be the answer.

IP geolocation and credit card fraud detection

As with most businesses that seek expansion, most e-commerce sites cater to an international audience. This has a major advantage - the more countries you support, the greater your potential customer base will be.

Of course, on the flip side, this does mean that you’re exposed to more threats as well; essentially, the location of the actors targeting you won’t be immediately apparent, as they could be from a number of countries.

Knowing the location of cybercriminals is crucial in your efforts to prevent fraud. For example, if you are aware of where the attack is originating from, you could use IP geolocation blocking to cut off access to your site from that region.

As far as reporting crimes go, it’s obviously preferable if you can pinpoint the location of the perpetrator. Most scammers are aware of this, however, and are prone to mask their location by various means.

With most credit card fraud cases, businesses only get wind of potential crimes by way of the scammed customer themselves. At this point, it’s too late to attempt to track down the cybercriminal’s location, except through unreliable credit card records. As a result, the only course of action you can take is simply offering a refund to the scammed party. Not only will this count as a net loss, but it is also very likely that that user won’t be returning to your site. Ever.

IP geolocation can help detect potentially suspect transactions as they happen, in real-time. For instance, when a purchase is made from a certain region, geotargeting tools will identify if it corresponds to banking and invoice records common to that region. These transactions will subsequently be flagged and the user will not be able to continue making transactions until they have been cleared.

The utility of an IP geolocation API

An IP geolocation API is a service that lets you gather the basic location information of users that visit your site.

These can be quite accurate in terms of pinpointing a user’s location at the city level with up to 80% accuracy. This is done through an approximation according to a user’s IP address and in some cases, it can even discern the user’s ISP and connection type.

With this information in hand, e-commerce sites can compare the billing and shipping addresses a user provides when they are making the transaction and check for any discrepancies. Again, this allows for suspicious traffic to be flagged and potentially blocked from making future transactions.

Additionally, an API can associate a specific domain with others through IP geolocation. What this means is that it can act as a point of reference for finding connections between users - malicious users, to be precise, and subsequently, the domains they’re associated with. This allows e-commerce sites to identify other potentially malicious domains and flag them as threats too.

Fighting online credit card fraud with IP geolocation tools

Credit card fraud, similar to many other prominent online security threats, isn’t going away any time soon. However, there are several measures you can take to minimise the risk of it happening on your site. IP geolocation is one of the easiest and most effective forms of defence you can set up in this regard.

Most importantly, it allows you to accurately identify where users are accessing your site from. Armed with this knowledge, you can use geo-intelligence to cross-check and identify potentially suspicious traffic. In fact, even if your website isn’t primarily an e-commerce site, IP geolocation tools can help you keep your site secure.

To find out more about premium and affordable IP geolocation services, click here.

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Dante A.
DIRECTOR OF WEB DEVELOPMENT
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