Two of the hottest topics around payment processing today are surcharges and cash discounts. These two strategies for beating credit card processing fees are becoming more and more popular among merchants, and many payment processing companies have begun to offer programs specifically designed to promote them. The problem is that many merchants don’t necessarily understand the rules around surcharging and cash discounting, and getting it wrong can result in some harsh consequences. With that in mind, let’s take a look at some of the more important details surrounding these two fee-reduction strategies.
Authorize.Net – the most popular payment gateway service provider in the world – is in the process of making a big change to how it verifies transactions, and that change impacts the business of every single one of their Direct Post users.
The company is phasing out MD5-based hashing and switching to SHA-512 signature key hashing. The last stage of the switch goes into effect on June 27th, 2019, and every business using Authorize.Net Direct Post, including BAMS users, will have to switch over before that date to avoid interruptions to their payment processing services.
To a lot of merchants, this might be a confusing topic or seem like an unnecessary hassle, but this change is an important step in keeping Authorize.Net’s transaction security on the cutting edge – something that benefits every single merchant on the platform.
Chargebacks are an unfortunate reality of accepting credit card payments, but they aren’t something businesses have to lie down and accept without a fight. Some chargebacks are completely legitimate, like cases where a purchase was made fraudulently by a third party. But many chargebacks are fraudulent, frivolous, or abuses of the system. In those cases, there is no reason for a company to accept losing the revenue, the product, and the additional chargeback penalty, and fighting back is in order.
There are only so many parts of running a business that you can prepare for. Like many aspects of life, it’s difficult to truly understand what it takes to be a successful business owner until you’re in the thick of it.
For example, one thing that no one tells you about starting a business is just how problematic chargebacks can be to an owner’s bottom line. Individually, these fees may not add up to much, but when underestimated and mismanaged, they can end up costing you big time.
When searching for the right payment processing solutions for your business, consider the importance of chargeback defense.
Over the past decade, the world of e-commerce has completely transformed consumer purchasing behaviors. Practically everything you once had to procure in-person can now be purchased from the convenience of your couch through a series of clicks, taps, and confirmation emails.
In fact, 1.79 billion people worldwide made a purchase online in 2018, with that number expected to grow to 2.14 billion by 2021. The moral of the story: your customers are shopping online with money that’s burning a hole in their pocket.
Credit cards are a big part of every business. If your store isn’t equipped for credit card transactions, you’ve already put a huge roadblock in the way of your company’s growth. But if you don’t have clear in-store and internal policies, even the best merchant services can’t help your business navigate new regulations. Here are two policies that your business needs to create and regularly review:
Whenever a credit card user disputes a charge they find in their credit card history, one of the provider’s first steps is to demand that the retailer returns the value of the charge. They protect consumers from fraudulent charges, but they can also be extremely costly to the merchant.
How can chargebacks hurt your business?
Even when the chargebacks are limited purely to potential credit card fraud, they can hurt your company’s bottom line. The revenue from a sale goes back to the consumer, and each chargeback usually has an associated fee. Having too many chargebacks can get your merchant account frozen, your company blacklisted, and your company fined.
Less straightforward incidents of chargebacks, like friendly fraud, can be even more damaging to your revenue and your company’s reputation.
What tools do you need to reduce the damage of chargebacks?
Get instant alerts so you can respond.
Chargeback alerts often come in the mail. Delays are bad for business. Text messages give you more opportunity to straighten out the dispute. Text messages can also be integrated with other automatic process tools so the alert becomes a case in the appropriate employee’s workflow.
Export your records to Excel.
It’s not just individual accounts of chargebacks that need your attention. Keep a living history of all the chargebacks issued to your company. Even if you don’t use the document to maintain a status report, you can use the report to know when your company is in danger of triggering fines, an audit, or the termination language with your payment processor.
Respond through an online interface.
Responding through faxes and letters is cumbersome. It also increases the risk of delays and the chance you won’t respond within the appropriate window of time. But an online management tool lets you respond immediately, keep track of responses, and organize the dispute.
Go to BAMS to find these and other tools for your company’s payment processing.
All chargebacks are frustrating, but it’s even worse when they happen because of fraud. Then, you not only lose the transaction but the merchandise as well. This alone is enough reason to make sure you stop fraud before you send out any products. Here are some of the chargeback prevention ways that you can armor your online store against fraudulent purchases:
The Zip Code Check
These checks are basic, but they block a surprising amount of suspicious transactions. One of the most standards is to collect the would-be buyer’s name and address. Then, use a shopping cart that sends that information to Authorize.net along with the credit card number. Set your Authorize.net account to compare the zip code on file with the credit card company against the one you were given. If they don’t match, it automatically declines the transaction.
Have Proof of Shipment
One of the most common ways to commit chargeback fraud is done by the criminal ordering things and then claiming non-receipt. Stop this nonsense by shipping everything using methods that give you tracking numbers and proof of delivery. All of the major shippers have an option that provides these things, and it’s worth it to use those options. Then if someone claims non-delivery, you can give us or a card-issuing bank the number to prove that your package indeed arrived.
Having this information at hand also helps you when the customer legitimately hasn’t gotten an item. You’ll be able to look up the tracking and see exactly where the package is in the shipping system. You can almost always get someone to be more patient if you can provide a detailed answer to the question of “where’s my stuff!?.”
To learn more about how to prevent fraudulent chargebacks and other problems, just contact us. We’ll be glad to help you make your business go more smoothly.
Chargeback prevention is one of the foremost concerns of online merchants. It’s always galling to have to send money in the wrong direction, and it’s even worse when the reason for it is outright fraud. With fraud, you’re not only out a sale but often, you lose your merchandise as well. Fortunately, there are ways to catch most of it before your products hit the shipping stream.
Use a Merchant Account with Fraud Prevention Tools
A merchant account that offers the right settings will, when those settings are properly tuned and activated, do much to increase your chargeback prevention success. Some of the typical options include automatic checking of the delivery zip code against the zip code of the credit card holder’s billing address, checking the card number against a database of stolen numbers, use of the Cardholder Dispute Resolution Network, instant notification of payment disputes, and more. The Cardholder Dispute Resolution Network is a fairly new system that allows chargeback and dispute information to be shared between card issuers and merchants and can let you spot a serial refund-seeker before you complete a transaction.
Manually Check Any Suspicious-Looking Order That Gets Through
Sometimes, even the best automated systems aren’t enough. This is why you should always check strange-looking orders – especially those for unusually-large amounts of merchandise – for fraud. Check Google Street View to see if the destination address is a vacant lot, look up the phone number the customer gave you as well as calling it, and check the origin area of the IP attached to the order.
These are some of the best ways to prevent online ordering fraud and the chargebacks that go with it. If you need a merchant account that will automate much of the work, just contact us. Our Chargeback Defense system is just what you need.