Credit Card Chargebacks
The definition of a chargeback is when a cardholder disputes a charge posted to their credit card account. Chargebacks can occur for various reasons, such as when a purchase was not authorized by the cardholder (fraud), or when goods or services are not provided as expected.
You should be able to avoid the vast majority of chargebacks by providing good customer service and ensuring that your products and/or services are advertised, and delivered, as promised.
For those chargebacks related to fraud, there are simple steps every business can take to help avoid any problems. It is up to every merchant account holder to be diligent in accepting charges, and to educate their staff about the precautions to take.
In environments where the business is accepting and swiping cards at the time of the transaction, there are several simple steps which can be taken:
- Always compare the signature on the receipt with the signature on the back of the card.
- Always examine the card to ensure it is not altered or suspicious looking.
- Request identification such as a license or some other picture ID.
In situations where the business is taking credit card without the customer present (over the phone or Internet, for example), the chance of fraud-based chargebacks is much greater. It is very important for these businesses to put systems in place to help determine legitimate charge activity.
- If appropriate, call customers to confirm their order if the billing and shipping or contact addresses do not match.
- Ask for the code number on the back of the card (or front with American Express®) to confirm that the card is in the customer’s possession.
- If you receive questionable orders, call to confirm the order with the cardholder.
If you have reason to believe that a card is fraudulent or otherwise questionable, always call the card issuing company for a voice authorization.
What to Expect in Your Monthly Merchant Account Statement
Merchant account statements can sometimes be confusing, especially for new merchants. Generally, questions and concerns pertain to the charging of monthly fees and the timing of account statements, so we hope that this article will help to explain some of these confusing aspects.
As with any credit card processing company, merchant accounts typically becomes active within one business day of the account approval date. Once your merchant account is live, you are able to process credit card transactions and are also responsible for any fees assessed starting on that date. Therefore, any monthly fees will be charged, in full, for every month the account is open, regardless of your processing volume.
Monthly fees are posted to your bank account generally within the first week of the month following your merchant account activation, and continue each month that your account remains live. A statement reflecting the charges for your previous month’s processing activity is then issued and should follow mid-month. If you do not receive your processing statement by the third week of the following month, you should contact customer service to confirm that we have the correct mailing address as specified on your merchant application.
Please contact a customer service representative if you have any questions or concerns about your monthly merchant account fees or credit card processing statement.
Does Your Business Need a Wireless Credit Card Terminal?
Is your business suffering because you’re unable to accept credit cards while on the road? Or worse, are you losing sales to declined credit cards processed off-location, without the customer or card present? If so, your business may need a wireless credit card terminal.
For mobile businesses (i.e. Transportation and Towing services, Contractors, Delivery services, Direct Sales, Trade Show and Flea Market merchants, etc.), a wireless credit card terminal enhances business mobility and efficiency, simplifies the billing and payment process, and increases sales and revenue.
Wireless terminals allow mobile merchants to:
Accept payments from anyone, anywhere, anytime:
- Wireless terminals offer mobile businesses a solution for accepting credit card payments in real time and on-location.
- With connections to multiple cell phone networks, wireless coverage is provided throughout the country.
- To enable continued operation in low-coverage areas, wireless terminals have a “Store and Forward” security feature that provides an offline capture of transactions.
Enjoy efficiency and convenience:
- Wireless terminals deliver a rapid check-out process, with verified transactions received in 2-3 seconds.
- Wireless terminals are compact, and easy to deploy and use.
Reduce the risk of financial losses:
- By accepting payments real-time, you can avoid losing sales from declined credit cards processed off-site.
- By accepting credit cards on-site, you can reduce the risk of carrying large sums of cash or receiving bad checks.
Operate with low processing costs:
- Wireless processing is an affordable solution for mobile merchants; since swiping a credit card with the customer present involves less risk, processing costs are lower compared to manually key-entering card information at a later time.
Wireless credit card terminals offer mobile merchants a simple and dependable payment solution from a handy device. So take advantage of the many benefits and capabilities supplied by a wireless credit card terminal, and start processing mobile credit card transactions today!
Visa® & MasterCard® Rules and Regulations
As a merchant accepting MasterCard® and Visa®, there are basic card acceptance rules that you must follow. By adhering to these rules, you can increase customer satisfaction and ensure that you do not run into compliance issues, which may put your continued ability to accept credit cards at risk. The following are some of the rules outlined in the Visa and MasterCard manuals:
Card Logos & Acceptance: You must display the appropriate card logos for any card types that you accept and advise your customers of their payment options. You must honor all categories of cards (credit, debit, rewards etc.) within each card type that you accept.
Dollar Minimums and Maximums: You may not impose a minimum or maximum amount for any transactions. If you do not accept a customer charge, which is below a certain amount that you specify, the customer can notify Visa and/or MasterCard, who will take the appropriate steps to see that you understand and adhere to the card acceptance rules and regulations.
Surcharges: All credit card transactions must be treated like any other transactions. You may not impose any surcharge on a transaction because your customer is using a credit card. However, you may offer a discount to your customers for paying in cash provided the offer is clearly disclosed to your customers and the cash price is a discount from the standard price charged for any other type of payment.
Laundering: You may only process transactions for your own business. Processing transactions for a business that does not have a valid merchant agreement is called laundering and is considered a form of fraud.
To learn more about the rules and regulations of accepting Visa and MasterCard cards, please contact us or see the Visa and MasterCard guides available through the Visa and MasterCard websites.
How to Avoid Downgrades
Whether you are currently accepting credit cards, or plan on doing so, it is important to know how to save money by avoiding downgrades whenever possible.
A downgrade simply means that you are being charged a rate increase because the type of card your customer is using has a higher processing cost or because a transaction was processed incorrectly by you, the merchant.
You can’t always prevent downgrades from happening, but this article will show you what you can do to keep your transaction costs as low as possible.
As an example, for a Retail or “Swiped” Account where the customer is handing over their card for processing, a transaction will get the Qualified Discount Rate (lowest rate possible) only if the card is swiped, the cardholder is present, and the card is a standard consumer credit card. If any of these criteria are changed, the account will “downgrade” to either the “Mid” or “Non” qualified level. These levels are each associated with a greater cost of processing.
Here is a more detailed description of what can be done to avoid many downgrades, and also what happens if certain criteria are not met.
Retail/Card Swiped Accounts
Qualified Rate
The Qualified Discount Rate is charged when all of the following occur:
- Standard consumer credit card is used
- Card is swiped accurately and data properly obtained
- The customer’s signature is captured
- The transaction is “Batched” or “Settled” within 24 hours
Mid-Qualified
The Partial/Mid Qualified rate will be applied when any of the following occur:
- The card info is manually entered, or “keyed” & all AVS info is entered
- The consumer uses a Rewards card
- Transactions are not settled/batched within 24 hours
Non-Qualified
If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.
- Card is manually entered with no AVS info entered
- The consumer uses a Corporate, Government or International card
- Authorization code is manually keyed in to your processing terminal.
- Transactions are not settled/batched within 48 hours
Keyed “MOTO” or Internet Accounts
For these types of accounts, the merchant manually enters credit card information into a credit card terminal or software after the order is placed or is collected through an online payment gateway.
Qualified Rate
The Qualified Discount Rate is charged when all of the following occur:
- Standard consumer credit cards are used
- All required Credit Card information is entered including AVS (address verification) for VISA® transactions.
- The transactions are “Batched” or “Settled” within 24 hours
- The order/invoice Number entered
Mid-Qualified
For MOTO/Internet Accounts, rates usually fall directly to Non-Qualified, not mid-qualify, but these are the possible reasons why a merchant may be charged a Mid-Qualified Rate
- AVS information is not entered
- Transaction/Batch is not settled within 24 hours
- Card is a Rewards or Business card
Non-Qualified
If any of the following situations occur, a Non-Qualified rate will be applied to the transaction.
- Any of the required card or transaction information is not entered
- The consumer uses a Corporate, Government or International card
- Authorization code is manually keyed in to your processing terminal.
- Transactions are not settled/batched within 48 hours
As you can see, there are many factors involved in determining which rates are assessed to your transactions. Follow the tips above, and you will keep your processing rates as low as possible. A Merchant Warehouse representative is always available to answer any questions or concerns you may have.
Selecting Credit Card Equipment
With so many different types of credit card equipment on the market these days, choosing the correct type for your business can be a confusing task. In order to help guide you towards the correct choices, here are some questions you should ask yourself when shopping for credit card equipment.
Will customers be using their credit or debit cards at my physical business location or will I be collecting the card information through another means?
- If you will be swiping cards directly from your customers, your best option for credit card equipment is probably some sort of credit card terminal and printer combination. If you will not be swiping the cards manually, many merchants will want credit card equipment that is more suited to their specific needs. Software packages are available if there is a PC at the business location or a standard terminal and credit card printer may work just fine.
Is a contactless payment solution the right choice for my business?
- Merchants who have "quick service" retail operations, and whose average ticket is $25 or less, may benefit from Contactless Payment credit card equipment. The "tap and pay" technology has proven to be most valuable for convenience stores, fast food restaurants, pharmacies, movie theaters and other merchants who rely on faster transaction times and shorter wait times for customers. Merchants can also upgrade their existing credit card equipment to a contactless payment reader without disrupting their operations.
Is there a phone line or broadband internet access available at the business location?
- Most businesses have at least one phone line at their business location and, these days, most have some sort of “always on” internet connection. For these businesses, there are many choices for credit card equipment. Most credit card equipment can share a phone line with a fax, or even the main phone if calls are infrequent and some of the newer terminals can utilize broadband internet for even faster transactions. If no phone or intent is available, such as at a trade-show or for delivery companies, etc, merchants should consider either a battery powered credit card terminal or wireless credit card machines that work over the cell phone networks.
Will you be accepting PIN-based debit card transactions?
- For those merchants that think they will be accepting debit cards they should consider adding credit card equipment like a PIN Pad to give their customers additional payment options. As described in this article about debit card processing, accepting PIN based transactions may save you money and add value to your customer’s experience.
How many merchant accounts will you need for your business?
- For almost all businesses the answer is one. There are examples however where multiple merchant accounts are either desirable or a necessity. These merchants will want a piece of credit card equipment that can handle more than one merchant account. There are inexpensive terminals which handle two accounts and more robust units which can handle up to 99. A qualified merchant account sales person should be able to recommend the correct credit card equipment for your specific situation.
Which terminal brands should I consider?
- Since most of the major credit card equipment manufacturers are producing high quality and feature rich products these days, you really can’t go wrong whatever brand you choose. That said, some of the processors may work better with a particular brand of credit card equipment and some newer pieces of equipment are not certified at every processor immediately upon their release. Again, this is a situation where it is best to let your merchant account sales representative guide you as to the best options given your particular processor and needs.
If you have any further questions regarding credit card machines, please feel free to contact our sales team for information and advice on purchasing equipment by calling the number at the top of your screen.