When a business obtains their merchant account for the first time, there are a few things to keep in mind before accepting credit card charges from customers. While security should be an obvious item to be concerned with, there is also the fact that merchants need to learn how to prevent credit card charge backs. If a store owner has too many, they stand to lose their ability to accept credit cards. Because of this, make sure that that you are well versed in some of the more common reasons that charge backs occur.
A common mistake from vendors is not getting all of the information from the credit card holder to verify that the card was indeed used. This is especially true when it is a phone transaction. If the consumer is physically in the store, be sure to get a manual imprint of the card to prove that it was on location. The only situation where the physical imprint would not be necessary would be if a magnetic strip reader were being used. In that case, the reader serves the same purpose as the imprint. Regardless of the method used for capture, make sure a signature is obtained on the credit card receipt.
When a transaction comes in over the phone, get all of the appropriate information, including the security code, and then run the card on your system while you have the person on the phone. If for some reason the card is denied, ask them for another card right away. Some vendors will also ask for a driver’s license number to prove the fact that the conversation ever took place. Consumers can get crafty when they want to and it is not uncommon for someone to order something by phone, receive the item, and then deny ever getting the item or having ordered it. Requiring a signature for receipt of goods and getting that little bit of extra information may very well be what saves the vendor from receiving a charge back.
If the business is selling something that offers recurring billing, it is always good to send a reminder out to verify that the consumer will be renewing their subscription before the billing actually occurs. If they want to opt out, they can reply to the message, giving the vendor enough time to cancel the transaction. Be very clear in the reminder that if they do not reply to the message, their card will be billed for another cycle.
Customers will often want their items received right away when they purchase them. For this reason, if the items being sold have to be shipped, make sure shipping method and delivery estimates are clearly explained. We have all been in situations where we ordered something and ended up getting upset because of the delayed delivery and then canceled the item. Verify all of this with the customer before completing the sale and it should avoid confusion and frustration on their end, as they will know when to expect their items. If there is a delay in shipping for any reason, be sure to send out an email or make a phone call apprising them of the situation.
Last but not least, make sure that a settlement is run on a daily basis. If charges are held back, there is a very good chance that they will be denied for “late presentment.” By running the settlement reports on a daily basis, the merchant bank can process everything on the day of the sale. This way, the charges will show up on the customer’s account on the same day that they made the purchase.
