Buddy the Banking Badger

Buddy’s Money Saving Tips

Short videos from Buddy with practical ways to keep more money in your business. Pick a tip below to watch.

CVV Checks: A Small Check With a Big Fraud Impact

The card verification value — the 3-digit code on the back of most cards, or 4 digits on the front for American Express — was specifically designed to address a particular fraud vector: it's not stored on the card's magnetic stripe or embedded chip, meaning a fraudster who obtains card data through skimming a physical swipe, or through certain types of data breaches that capture stripe or chip data, still won't have the CVV unless they physically had the card in hand or obtained it through a separate, more difficult breach of data that specifically retains it. For card-not-present transactions specifically — online orders, phone orders, any situation where the physical card isn't being read directly — requiring the CVV is one of the highest-value, lowest-friction fraud checks available. It adds a few seconds to checkout, something most customers barely notice given how standard it's become, but it meaningfully raises the bar for someone attempting to use stolen card data they obtained through a method that didn't capture this specific number. If your checkout process, virtual terminal, or phone-order procedure isn't currently requiring CVV entry on every transaction, this is one of the simplest, most cost-free fraud-prevention improvements available to implement — there's very little reason for any card-not-present business not to be requiring it as a standard, non-negotiable part of every transaction.

More tips from Buddy

A Regular Statement Review Most merchants have never had someone actually explain every line of their statement to them — and that gap is exactly where avoidable fees hide. A regular statement review (annually, or any time your processor changes pricing) is often the single highest-ROI thing a business owner can do for their bottom line.

Interchange Back on a Refund When you refund a sale, you generally don't get back the interchange fee you originally paid — even though the money is going back to the customer. Some processors do return a portion; most don't automatically. It's a good line item to specifically ask your processor about, since it affects the true cost of any return-heavy business.

Virtual Terminals: Useful, But Priced Like Keyed Transactions A virtual terminal lets you manually process phone or mail orders through a web browser — handy for taking payment without a physical card reader. But because the card isn't present, expect the same higher, "keyed" interchange rate that applies to any card-not-present transaction, plus sometimes a separate monthly access fee for the tool itself.

CVV Checks: A Small Check With a Big Fraud Impact Requiring the 3- or 4-digit security code on the back (or front, for Amex) of a card adds negligible checkout friction but meaningfully reduces card-not-present fraud, since that number isn't stored on a card's magnetic stripe or chip. If you're not requiring it on every online or phone transaction, it's one of the easiest fraud-prevention wins available.

If You Surcharge, Follow the Rules Exactly Card networks set hard limits regardless of state law: surcharges are capped around 3% (Visa) or the lower of your actual processing cost, must be clearly disclosed with signage and on the receipt, and can never be applied to debit or prepaid cards — even ones that route as "credit." Getting this wrong risks losing your surcharging privileges or your merchant account entirely.