Best practices for managing credit card acceptance
Best Practices for Managing Credit Card Acceptance.When you accept a credit card payment, you and your customer enter into an implicit agreement. You provide goods and services; your customer provides payment for them.
Some transactions, however, go awry. By following some simple practices, you can reduce the likelihood of payment disputes and fraudulent charges — or be more prepared to handle them should they occur.
Card-present vs. E-Commerce transactions
When you are face-to-face with a customer and their payment card, the chances of a dispute are lower than if payment is made online or over the phone, which makes it difficult to verify that the customer is, in fact, the cardholder.
Best practices for card-present and E-Commerce transactions, therefore, vary in some key ways.
For card-present transactions:
- Confirm your customer’s identification. Ask to see a government-issued ID before completing a transaction and compare the name on the ID with the name on the card to ensure they match.
- Use up-to-date equipment or point-of-sale software. Since the introduction of chip (EMV) cards, you – the seller – are liable for fraudulent transactions if a chip card is swiped, rather than inserted or tapped on a chip card reader. In other words, it pays to stay current. Because your customer’s information is automatically captured in this process, avoid key entry whenever possible.
- Seek authorization and obtain customer signatures. Do not complete a transaction if the authorization request is declined. If a signature is required, check to be sure it is compatible with the one on the card.
- Provide a receipt. A receipt offers value to both you and your customers. It helps customers remember charges when they appear on a card statement. Likewise, it provides you backup support in the event of a customer dispute.
Online transactions and other card-not-present transactions call for alternative best practices.In addition to obtaining the cardholder name, card number, expiration data and CVV code from the card, merchants accepting online or phone card payments should also:
- Get to know your customers. Before completing large or high-value orders, verify your customer’s billing and, if applicable, business addresses. For first-time customers, consider conducting an online identity search or ask for an image of their photo ID, making sure it matches the name on the payment card.
- Confirm billing and shipping addresses and ZIP codes. If a customer’s billing and shipping addresses don’t match, particularly on large orders, find out why. If the answer doesn’t make sense, deny payment.
- Obtain delivery confirmation and/or proof of service. If you are shipping a product, keep the tracking information and delivery receipt. For large orders, a signed confirmation of delivery should be required. If payment is made for a service, ask your customer to review and sign a work order, and keep a copy for your records.
- Obtain approvals on recurring payments. It’s smart to require customer sign-off on any issue that could be later disputed. If a customer has a recurring charge, for example, either obtain a signature for each payment to protect against possible claims of unauthorized transactions or get written permission from the cardholder for recurring charges. Written agreements should include transaction amounts, frequency of payment and duration of the agreement, as well as the cardholder’s signature.
A few other best practices that apply to all card transactions:
- State your refund policy. If you don’t allow refunds, you must say so in writing on the customer’s receipt. Refund policies should also be posted on your website and in retail locations. If refunds are allowed, always issue them directly back to the original payment card and for the full amount of the original purchase. And – if it’s a face-to-face transaction – obtain a signed agreement from the customer acknowledging the refund.
- Provide contact information on receipts – Include your phone number, mailing and email addresses, and other relevant contact information on your receipts. This will help customers reach out to you directly if they have a question about a sale, rather than immediately filing a dispute.
- Never allow employees to process their own card transactions. This is just a good separation of duties practice.
- Make sure the business name on your receipt matches what appears on a customer’s card statement. If a customer sees an unfamiliar business name on their statement, they may be more inclined to file a dispute. If that isn’t possible, advise customers what name to expect on their statements.
- Settle all transactions daily. Transmit all transactions at the end of each processing day – or more frequently, if needed. Limit delays in the delivery or processing transactions as much as possible.