Fending Off Carding Attacks to Optimize Payment Operations

Here at Pagos, we know optimizing your payments stack means more than just successfully selling goods and services to engaged customers. Real optimization involves maximizing revenue, minimizing costs, successfully fending off fraud, truly getting to know your customers, and regularly A/B testing new solutions. Pursuing all five of these North Stars can feel overwhelming, especially if you’re operating with a small Payments team and limited resources. 

We built Pagos Insights to make optimization infinitely more accessible. Our AI-powered intelligence platform not only surfaces issues and opportunities, but gives you a clear view into how every optimization effort impacts your bottom line. So let's look at how this works in practice with just one of the many frustrating challenges merchants can face: carding attacks.

What Is a Carding Attack?

Carding attacks are a form of payment fraud where bad actors use bots to test batches of stolen credit card credentials. The ultimate goal of these bad actors is to identify which cards are active by firing off large numbers of small test transactions. These attacks often target merchants with minimal fraud controls and high authorization tolerance, and tend to be for low-value transactions.

Carding attacks can have short and long term impacts on your business, including higher processing costs and operational noise—not to mention the risk to your relationships with processors, card brands, and customers. To fight them, you need a layered defense strategy: rate limiting, AVS/CVV checks, bot detection, and targeted fraud rules. Perhaps even more important is the ability to see these attacks forming and act fast.

Spotting a Carding Attack Early with Pagos

To stop a carding attack, you need to know it’s happening. To prevent the next one, you need to understand exactly what happened last time. Pagos Alerts has everything you need to not only catch attacks before they cause lasting damage, but learn everything possible about the fraudsters themselves.

Alerts is our AI-powered anomaly detection service, designed to continuously monitor your payments data and flag anything unusual for your immediate review. When you receive an alert notification, we don’t just tell you something is off, we zoom in on the exact segments of your transaction volume impacted by the anomaly. Whether it’s a sudden spike in transactions from a single BIN, an increase in declines with specific decline codes, or any other concerning trend, we’ll identify exactly what’s wrong, where it’s happening, and why.

Here’s how Pagos Alerts helps you detect carding attacks before they become a full-blown problem:

• Transaction Spikes by BIN - A sudden spike in authorizations from a single bank identification number (BIN) is often the first sign of a carding attack. We built Pagos Alerts to identify these in real time—and even wrote a full post on catching BIN spikes before they burn you.

• Decline Code Increases - Early in a carding attack, you’ll often see a flood of declines like Refer to Issuer, CVV Failure, and Account Closed. Once issuers catch on to the attack behavior, those may shift to Fraud Lost Card, Pick Up Card, or Suspected Fraud. Alerts monitors your decline mix and can notify you when these patterns show up. And if you want to dig deeper, seamlessly navigate over to the Declines dashboard in Pagos Insights, where you can isolate issues by market, issuer, card type, or other segments and respond with precision.

• Approval Rate Drops - If your approval rate suddenly drops for one of you MIDs, it might be because bad traffic is overwhelming your checkout. Pagos Alerts flags these dips, so you can stop them and make changes before revenue takes a hit. Continue to monitor that MID’s transaction volume in the Approvals dashboard to ensure the issue doesn’t persist long term.

From Fraud Defense to Full-Stack Optimization

Fighting carding attacks protects your revenue and reputation by limiting risk exposure. Furthermore, it serves as a real-world example of the payments optimization North Stars in action:

1. Maximize Revenue - Every fraudulent transaction you process risks triggering a chargeback, but every fraud rule that’s too strict might block a good customer. Pagos helps you walk that line with precision. Instead of blocking entire markets or BIN ranges to avoid carding attacks, you can design fraud rules that only target the risky segments identified in Pagos Insights and protect your revenue.

2. Minimize Costs - Carding attacks drive up your authorization volume and associated costs. Catching them early avoids unnecessary spend on processing fees, as well as operational triage and fraud review time and potential chargeback costs.

3. Fight Fraud - This one’s simple: fighting carding attacks means protecting your business from the damaging impact of fraud. Using the Risks dashboard in Pagos Insights, you can continuously monitor fraud rule performance and make necessary changes over time.

4. Get to Know Your Customers - Pagos gives you access to rich BIN data, which you can use to determine not just which cards are causing fraud, but which ones are consistently tied to good transactions. Segment by issuer, geography, or card brand to better understand your traffic—both fraudulent and legitimate—and use that knowledge to protect good customers from getting caught in the crossfire.

5. A/B Test New Solutions - Want to try stricter CVV rules? Block specific BINs? Require 3D Secure for high-risk traffic? Pagos makes it easy to experiment, monitor the results, and iterate quickly.

Optimizing Payments, Minimizing Carding Attacks

Carding attacks are fast, frustrating, and can fly under the radar, racking up short and long term costs for your business. But with the right visibility and tools, you can catch them early, respond intelligently, and strengthen your payments stack in the process.

Pagos doesn’t just help you fight fraud, we help you optimize everything in your payments stack. When the next wave of bad actors shows up, be ready with Pagos by your side. Contact us today to get started!