Trust and the Credit Card Processing System

It all begins with trust. From the moment the issuing bank issues a credit card to your customer to the time the issuing bank transfers funds into your bank account, the issuing bank is trusting that the customer will repay the bank in a timely fashion and will not default on their payments. The issuing bank is also trusting that you, the merchant, has done everything in your power to insure that the transaction was initiated and authorized by the cardholder. Once the payment is received, you are entrusted that the goods and services will be furnished to the customer. In case the goods/services are not rendered to the customer, the customer can dispute a charge. If a chargeback will occur, the merchant will be charged back for the funds that were paid to you by the issuing bank for the goods/services that were promised to the customer. Chargebacks are rare; however, they can be damaging to your merchant service account, as this will lower your overall trust and reputation, and will lower your merchant credit score.

What are Chargebacks?

If a customer contests a charge,you will be given an opportunity to show proof of the transaction.
If you are not able to prove the cardholder authorized the transaction, then the chargeback will be issued and the customer’s issuing bank will be issued the funds that were originally paid to you, the merchant. All chargebacks are put on record with the merchant bank and can affect your company/corporation’s credit and can severely damage a merchant's services account if too many chargebacks occur.

GET will notify you, the merchant, as soon as a chargeback is issued, before the credit card transaction is removed from your bank. If a chargeback is issued, and you are able to prove that the transaction is valid and authorized by the cardholder, the funds will be placed back in your bank account. At this point if the customer continues to dispute the charge, a Type III chargeback occurs and this can lead to legal action if an agreement is not made concerning the credit card transaction in question.

A merchant’s reserve account cannot be used to pay for a chargeback. This account is put in place as a security issue for the acquiring bank and/or credit card processing company. The best way to prevent chargebacks is to closely monitor how the payment is being processed, and ensuring you are taking all the steps necessary to verify the cardholders identity. It is your responsibility as the merchant to protect yourself against chargebacks and/or fraudulent credit card users.

Avoiding Chargebacks

There are ten basic things that merchants can do to protect themselves when it comes to credit card processing. They are:

1. Make sure you’re dealing with a legitimate cardholder.
2. Always check for the authorized signature
3. With telephone/mail orders, get the name and phone number of the cardholder and tell them that you will contact them before goods/services are delivered. This is effective because fraudulent users will not want to give out this information. You may also want to use a ground carrier that requires a signature for delivery and only ship to the cardholder’s billing address. A criminal will not want the goods/services delivered to the same address as the cardholder’s shipping address. If your credit card terminal has the AVS system, the billing address for the credit card used will be known.
4. With Internet orders, the merchant should always make sure that their Internet software asks for or has:

• Cardholder’s phone number and email address (verification of a legitimate domain name)
• Cardholder’s IP address (can be used to track down a fraudulent credit card user)
• Posted warning on the web site that the merchant prosecutes criminals
• The ability to produce hard copies of credit card receipts saying that goods and services have been provided 5. Try to know the cardholder.
6. Use AVS-if the address verification fails on any level then the merchant services account can refuse the credit card transaction or can call the cardholder to verify a billing address.
7. Get a signed receipt and signed proof of delivery (it can be used if issued a retrieval request).
8. Merchants should be clear and consistent concerning warranties and return policies when it comes to credit card transactions
9. Submit credit card deposit transactions only when goods/services have been delivered.
10. Keep Merchant ID and Terminal ID secure so no one can make unauthorized credit card transactions. Make sure transaction-processing equipment stays at your place of business, and make sure only authorized personnel have access to credit card equipment. You will also want to make sure that your Internet software provider, when used, keeps ID secure.
 

Trust and the Credit Card Processing System

It all begins with trust. From the moment the issuing bank issues a credit card to your customer to the time the issuing bank transfers funds into your bank account, the issuing bank is trusting that the customer will repay the bank in a timely fashion and will not default on their payments. The issuing bank is also trusting that you, the merchant, has done everything in your power to insure that the transaction was initiated and authorized by the cardholder. Once the payment is received, you are entrusted that the goods and services will be furnished to the customer. In case the goods/services are not rendered to the customer, the customer can dispute a charge. If a chargeback will occur, the merchant will be charged back for the funds that were paid to you by the issuing bank for the goods/services that were promised to the customer. Chargebacks are rare; however, they can be damaging to your merchant service account, as this will lower your overall trust and reputation, and will lower your merchant credit score.

What are Chargebacks?

If a customer contests a charge,you will be given an opportunity to show proof of the transaction.
If you are not able to prove the cardholder authorized the transaction, then the chargeback will be issued and the customer’s issuing bank will be issued the funds that were originally paid to you, the merchant. All chargebacks are put on record with the merchant bank and can affect your company/corporation’s credit and can severely damage a merchant's services account if too many chargebacks occur.

GET will notify you, the merchant, as soon as a chargeback is issued, before the credit card transaction is removed from your bank. If a chargeback is issued, and you are able to prove that the transaction is valid and authorized by the cardholder, the funds will be placed back in your bank account. At this point if the customer continues to dispute the charge, a Type III chargeback occurs and this can lead to legal action if an agreement is not made concerning the credit card transaction in question.

A merchant’s reserve account cannot be used to pay for a chargeback. This account is put in place as a security issue for the acquiring bank and/or credit card processing company. The best way to prevent chargebacks is to closely monitor how the payment is being processed, and ensuring you are taking all the steps necessary to verify the cardholders identity. It is your responsibility as the merchant to protect yourself against chargebacks and/or fraudulent credit card users.

Avoiding Chargebacks

There are ten basic things that merchants can do to protect themselves when it comes to credit card processing. They are:

1. Make sure you’re dealing with a legitimate cardholder.
2. Always check for the authorized signature
3. With telephone/mail orders, get the name and phone number of the cardholder and tell them that you will contact them before goods/services are delivered. This is effective because fraudulent users will not want to give out this information. You may also want to use a ground carrier that requires a signature for delivery and only ship to the cardholder’s billing address. A criminal will not want the goods/services delivered to the same address as the cardholder’s shipping address. If your credit card terminal has the AVS system, the billing address for the credit card used will be known.
4. With Internet orders, the merchant should always make sure that their Internet software asks for or has:

• Cardholder’s phone number and email address (verification of a legitimate domain name)
• Cardholder’s IP address (can be used to track down a fraudulent credit card user)
• Posted warning on the web site that the merchant prosecutes criminals
• The ability to produce hard copies of credit card receipts saying that goods and services have been provided 5. Try to know the cardholder.
6. Use AVS-if the address verification fails on any level then the merchant services account can refuse the credit card transaction or can call the cardholder to verify a billing address.
7. Get a signed receipt and signed proof of delivery (it can be used if issued a retrieval request).
8. Merchants should be clear and consistent concerning warranties and return policies when it comes to credit card transactions
9. Submit credit card deposit transactions only when goods/services have been delivered.
10. Keep Merchant ID and Terminal ID secure so no one can make unauthorized credit card transactions. Make sure transaction-processing equipment stays at your place of business, and make sure only authorized personnel have access to credit card equipment. You will also want to make sure that your Internet software provider, when used, keeps ID secure.