Payment Processing & Security Flashcards

What is friendly fraud in ecommerce?

Answer: When a legitimate customer files a false chargeback after receiving goods

Friendly fraud occurs when a customer makes a legitimate purchase, receives the goods or services, but then disputes the charge with their bank claiming fraud.

What does EMV stand for in the context of payment card technology?

Answer: Europay, Mastercard, and Visa

EMV stands for Europay, Mastercard, and Visa — the global standard for chip-and-PIN payment cards that provide stronger security than magnetic stripes.

Which type of payment fraud involves a criminal using stolen card information to make unauthorized purchases online?

Answer: Card-not-present (CNP) fraud

Card-not-present (CNP) fraud is the most common type of ecommerce fraud, where stolen card details are used for online purchases without the physical card.

What is a payment processor's role in an ecommerce transaction?

Answer: It handles the technical transfer of transaction data between the merchant, card networks, and banks

The payment processor manages the technical aspects of transmitting transaction data between the merchant's bank, the card network, and the customer's issuing bank.

What is interchange fee in ecommerce payment processing?

Answer: A fee paid by the merchant's bank to the customer's card-issuing bank per transaction

Interchange fees are paid by the acquiring bank to the issuing bank for each card transaction and are typically the largest component of overall payment processing costs.

Which security measure requires customers to enter a one-time code sent to their phone during checkout to verify their identity?

Answer: Two-factor authentication (2FA)

Two-factor authentication (2FA) requires an additional verification step beyond a password, such as a one-time code sent via SMS, adding a layer of security at checkout.