Dec 2, 2014
At this time of year, nonprofits are processing donations at a higher volume. To keep your operation running smoothly at the end of the year, you need to have advanced fraud protection in place. Although the Internet is a valuable tool for organizations, it creates more security risks. Charities are particularly vulnerable to online fraud.
A recent study from Worldpay revealed that 79 percent of online merchants believe the addition of new payment channels has opened them up to new risks. Many nonprofits accept multiple forms of payment, whether it's checks, online donations or social transactions. In addition, of those surveyed, many said they had trouble keeping up with the latest news in online fraud. This prospect becomes even more difficult as nonprofits that accept online donations begin to operate in different countries.
Offering multiple payment options, such as credit, debit cards and ACH (direct debit), can improve donors' experience with your organization, but it can open the door for higher risks.
New nonprofit trends create the need for more sophisticated fraud prevention
Crowdfunding applications in the nonprofit realm have become popular. These software programs help charities connect with a larger number of people in a shorter time. Because donors can easily share campaign information through their social profiles, your organization has the potential to reach many new contributors who may not have heard of your cause otherwise.
Crowdsourcing can be risky for both organizations and donors, according to PYMNTS. Websites like Kickstarter and Indiegogo do not offer refunds, so individuals participate at their own risk. Campaigns on these sites promise participants some reward for their gifts, but they have no way to recoup their donations.
How nonprofits can protect themselves from fraud
Any credit card transaction where the physical card is not present can pose a potential threat for organizations. Nonprofit payment processing is incomplete without advanced fraud protection features. There are many security features that can help charities protect themselves and their donors. Address verification and bank identification number checking can cut down on fraudulent transactions. BIN checking can block credit card transactions from specific countries to prevent suspicious donations from being processed. Similarly, Internet protocol addresses in high-risk countries can be blocked from making transactions on your website.
Another useful security feature for nonprofits is setting a minimum transaction limit. Many cybercriminals use charities' websites to check the validity of stolen credit card information by entering donations of less than a dollar. Creating a minimum limit can deter these individuals. You can also enable CVV2 verification, which requires individuals to enter the three-digit code from the backs of their cards. Because hackers have ways of generating numbers without possessing the physical card, this allows you to prevent more types of fraud.
In addition, you can display a security badge on your site to boost contributors' confidence. Many individuals are giving online, but they want to ensure their financial information will be safe. Online payment security should not be overlooked.