Many businesses that have had a merchant account for a long time are surprised when some transactions are flagged as being possibly fraudulent, while others tend to go through with no problems. One of the most common things that many businesses encounter is large transactions being declared fraudulent. While this is usually resolved with a few phone calls, it can be difficult to explain to customers.

Part of payment processing is checking the credit card payments that are being processed for signs of fraud. Since it’s impossible to run a complete background check on every transaction, however, most merchant account services rely on a computer program that flags transactions that are out of the ordinary. This runs for both the business and the credit card holder. For example, a credit card holder that typically shops in his or her hometown might be flagged for possible fraud if his or her card is swiped in a store thousands of miles away without any transactions made to show that he or she was on vacation. Similarly, a business might be flagged for a transaction that doesn’t line up with their regular transactions.

Flagged transactions are potentially risky transactions, that will be verified by our Risk Audit team and updated manually as authorized/canceled within 72 hours. The flag status is used to alert you to any suspicious transactions on your account. Not every flagged payment is fraudulent, but flags indicate that a payment is worth investigating.

When a payment is flagged, you must submit the KYC of the customer within 72 hours. If you take no action, the payment expires automatically after seven days, and the funds return to the customer.

It is EXTREMELY important to regularly and frequently monitor Suspect Transactions.

Criteria for flagging transactions as suspect are as follows:

• Velocity check for multiple identical transactions (same amount) from the same credit card and/or IP address within a short period of time (for Card Not Present transactions only)
• Questionable IP addresses which fraudulent activity has been reported from previously
• High-risk country check 
• Transaction amount exceeds $5,000

Flagged transactions are transactions in Octapay that reflect credit card transactions that have been flagged as a suspect because they look suspicious to a gateway. These transactions have already processed successfully and are only being flagged for review.