How Business Can Protect Themselves From Fraud in an Ecommerce Environment - Essay Example

Fraud transaction is an issue of concern among customers and merchants. In the situation of fraud transactions, customers have several assurances from their card issuing banks through companies like master cards, visa, American express, and discover. Nevertheless, merchant have limited resources to counter fraud occurrences. Merchants can also follow the stipulated legal transaction process but end up losing payment without making any mistake. In case of a fraud transaction, banks are always not willing to refund the merchant resources.

It is also likely that banks do not even bother to do an investigation on merchants’ claims. On the other hand, it is extremely easy for customers to make fraud claim to the bank as compared to merchant. Most customer claim refund of their transaction verbally. In most cases, detecting fraud cases is very expensive and labor extensive to merchant companies. In the scenario of fraud transaction, merchant are the one who suffer immensely since customers can be compensated the loss. It is therefore imperative for online merchants to take action and come up with ways of minimizing fraud risks and protect their business from any financial loss through fraudulent transactions.

Proper measures can increases confident among merchant in transacting business online. To develop confidence in their transaction, merchant should adopt the following measures . One key is for decryption which is also known as private key while the other key is for encryption commonly known as public key. The public key is used by transaction administrators to assess the transaction process while the private key is used by customer and merchant to protect their personal information. The key helps in denies access of transaction information to intruders and hackers.

The technology is also characterized by theoretical based security guarantees, effective weighing features and arithmetical elegance which identify the area transaction fraudulent. The technology does not require centralized intermediary for safe transaction thus it is cheap for the business (Anderson, 2001). The other most effective technology for protecting data and preventing fraud transaction is the use of smart cards. Smart card is effective in storing data such as identification credentials, medical information, and financial records.

Due to the sensitivity of the information contained in smart card, encryption keys are exceptionally relevant. The information in smart can be very helpful in retracing the transaction process in case the transaction is fraud. The merchant can use the contents in smart card to trace the customer in the situation of any transaction problem. It also reduces trust between the merchant and the customer thus forcing the merchant to be more cautious in the transaction process (Bishop, 2003). To protect their businesses from fraud transactions, merchants should adhere to the laid down guidelines and security policies.

Most fraud cases are brought about by failure of merchant to adhere to the laid down security policies and regulations. More than 60 percent of the fraud cases emerge as a result of exposing transaction