The Merchant Processing Guru

The Merchant Processing Guru Tip#13 continued: Credit card processing “Chargebacks” What are they and how to avoid them!

“Chargebacks” not only cost you the money you should have made from the sale but the processor has to charge you for the involvement they have in dealing with the issue, the processor will charge you anywhere from $15.00 to $35.00 as what is called a “chargeback fee”. Whether you win or lose the dispute then there is still that chargeback fee to cover the costs of the processor getting involved to handle this issue. So treat your customers right and you will avoid chargebacks!

You may also be charged what is called a “retrieval fee” of approx. $5.00 – $25.00 for the processor to “retrieve” the funds from your account that were disputed should you lose the dispute. It gets worse! Should you have excessive “chargebacks” of more than 1% of the transactions you process then according to Visa & MasterCard’s terms you are an unacceptable risk to them and their card members and will most likely be dropped by your credit card processor. A processor can also be penalized for having anyone on their books who has more than a 1% “chargeback” history and you will find it very hard for any processor to accept you as a merchant after being dropped for this reason. As you can see, you want to avoid this unpleasant occurrence at all costs, so always have proof and signature for every transaction. The good news is that “chargebacks” in most traditional industries are a rare occurrence, so as long as you stick to the guidelines of accepting credit cards you won’t have anything to worry about. If you have questions or concerns just get in touch with me and I will be happy to help.

Contact me at: theGuru@theMerchantProcessingGuru.com

The Merchant Processing Guru Tip#13: Credit card processing “Chargebacks” What are they and how to avoid them!

A “chargeback” is where a card holder calls up their credit card company to dispute a charge on their card. This will start the process where you as the merchant who placed this charge will have to prove that it was a legitimate transaction. Should you have a signed credit card receipt then you are probably home free but should you not have this very important little bit of information then you have a battle on your hands that you are not very likely to win.

Visa & MasterCard are most interested in protecting their card holders more than the merchants who process the transactions and they will always side on the card holders side whenever possible. Only when you can prove beyond a doubt that a transaction was legitimately made by the card holder will you prevail.

ALWAYS HAVE PROOF OF THE SALE AND THAT THE PERSON WHO’S CARD YOUR PROCESSED MADE THE ORDER! If you are meeting your client in person and not swiping the card on a terminal but entering the card information manually then always get an imprint of the card with an old fashioned manual imprinter, affectionately known as a “Knuckle buster”, with their signature on the slip and filled out completely. If you do not see them in person and you get their credit card information given to you in some other way then this is the riskiest type of transaction and to make it a whole lot safer, you will want to make sure you have something signed by the client, which you can email them and have them sign and fax or scan & email it back to you. This will help eliminate the risk of a “chargeback”. If you don’t have a form to send or aren’t sure how to draft one, I can provide you with a form to send your clients, every time they want to use a credit card, that will cover you in case of a dispute.

If you can’t or don’t want to do this part then the next best thing would be to have an email or some sort of order with the person’s name and as much information about them as possible. Again, this can be risky and the higher the amount of the sale the more you stand to lose if the client disputes the transaction. It is always better to take the extra precautions to cover yourself from a potential, costly dispute. To be continued in my next post.

The Merchant Processing Guru Tip#12: Credit Card Processing with Mobile Solutions continued – Dial Pay & iPhone apps. “DialPay” is a term used in the industry for processing cards from your cell phone or even from home or office phone. This is usually an automated system that you call into using an 800# and punch in the card & sale information and get an approval # or a decline on the spot. It is a little time consuming to punch in all the information but for the occasional sale it is a great solution and a very cost effective one. One thing a lot of people don’t realize is that you MUST GET A MANUAL IMPRINT OF THE CARD with this solution. This is to avoid “chargebacks” or at least give you the proof of a legitimate transaction with the customer’s signature and imprint of the card. ANY TIME YOU DO NOT SWIPE THE CUSTOMER CARD YOU SHOULD HAVE WRITTEN PROOF OF THE SALE, a manual imprint in this case gives you that. You do not need to do anything with the slip accept hold on to it for your records and give the customer their copy.

This solution is perfect if you only have a few transactions a month but you want to offer your clients the option to pay by credit card so you do not turn away any sales. Great for service people like Electricians or independent Carpet Cleaners who may have a transaction once or twice a week…

The iPhone credit card processing app. If you own an iPhone then this may be a good solution for you instead of the “Dial Pay” option. Basically this application allows you to access a Secure Gateway “Virtual Terminal” just like the ones you would access anywhere from a computer, in fact you can still access your Virtual Terminal from a computer in the same way you can from your iPhone. So even if your iPhone is not working, as long as you have access to a computer you can continue to accept credit cards…

There are at least 15 iPhone apps. for processing credit cards last time I counted. Choosing the right one can be a little daunting, I have tested a couple and found 2 that I would recommend for most processors out there. Absolutely terrific solution for someone who has, takes or has the potential to take a good number of card payments in and out of the office!

The Merchant Processing Guru Tip#9: “Hidden Fees”! The hidden fees referred to in the credit card processing business are fees like mid-qualified & non-qualified rates that are not disclosed when the agent is setting up the account with a merchant. Many will come in offering a great low qualified rate without disclosing to you, the business owner, all the “downgrade” possibilities that are part of processing cards.

Yes, there are other fees in this industry like a statement fee, a batch fee, an annual fee, an early termination fee, a chargeback fee, just to name a few but these are all part of the cost of processing credit cards. Many will have you focus on all these fees to steer your attention away from what is really important, the downgrade charges.

Let’s look at it this way: If you had a $99.00 annual fee, that is an additional $8.25 per month cost of doing business. But should you pay 1% more than you have to with your discount fees, on say, a volume of $10,000 per month, that is $100.00 per month additional cost of doing business.

I am not saying that the miscellaneous fees are not important to look at, you must absolutely know and determine if they are fair and know what your costs in all areas are going to be. Just don’t allow that to take your attention away from what is really important, your discount fees, as that is where you could lose a great deal of money, unnecessarily and unknowingly if you are not careful.

Contact me at: theGuru@theMerchantProcessingGuru.com