Ways to Counter Chargebacks and Fraud

Credit card fraud and chargebacks are a constant threat to any online business. According to the 2001 Online Fraud Report, conducted by Mindwave Research, 41% of merchants find online credit card fraud a serious threat to their business. There is a need for immediate measures to reduce and virtually eliminate chargebacks and fraud.

A chargeback occurs when a transaction is reversed or a certain amount of money from your account is deducted. Chargebacks can occur for reasons such as, double-charging, credit card expiration, bank error and customer disputes. A large number of chargebacks are fatal and you may even lose your merchant account. Once you've lost your merchant account, you are placed on the Visa/MasterCard Terminated Merchant File (TMF/MATCH list) for several years. If you are on the list, you will face difficulties in getting another merchant account.

There is still hope. And this hope lies in the ways to counter chargebacks and frauds, as listed below: -

•Post a warning message- post a warning message on your order page to discourage fraudulent elements. Also, mention that IP (Internet Protocol) addresses are logged and come in handy when locating people about fraudulent orders.

•Request fax copies of ID and credit card- You may ask your customers to fax a copy of both sides of their credit card and driver's license. This is for verification purposes and works best in a B-to-B (business to business) sales environment.

•Signatures on delivery- you may have your carriers get customer signatures which you retain for your records.

•Watch out for orders using free e-mail addresses- Avoid taking orders from free e-mail addresses as it is difficult to track such people.

•Handle suspicious orders accordingly- If an order seems suspicious to you, call or e-mail the customer to make verifications.

•Let customers know what name will appear on statements- If you’re using a third-party credit card processor, it is the processor’s name that appears on the credit cad monthly statements of the card holder. Reduce confusion by informing your customers in advance what they should and shouldn’t expect.

•Scrutinize orders from developing foreign countries- A large percentage of fraudulent Internet purchases are made from overseas. Accept these orders at your own risk.

•Use Address Verification System (AVS)- AVS is critical to ensure the address entered on the order form matches the address to where the cardholder's billing statements are mailed. AVS only works with orders conducted in the US.

•Collect CVC2 and CVV2 Verification Numbers- This reduces instances of chargebacks by 26%. You may ask your MasterCard, most Visa and Discover credit card holders’ to give the 3-digitsecurity code located right after the credit card number as an additional verification measure.

•Interactive Voice Response (IVR) Terminals- These are a new solution that reduces fraud by collecting a "voice stamp" or voice authorization and verification from the customer.

If you follow the above instructions, your chargebacks will be minimized to a great extent. Lesser the chargebacks, the more your business prospers. Chargebacks and fraud cannot be ignored. Thus, risk management solutions must be incorporated and exercised.

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What to Look For in a Credit Card Processor

Once you’ve established your online business, its time to get yourself a merchant account or approach a third-party credit card processor. You can first and foremost turn to your bank for credit card processing services so that they can process your business payments for you. However, you may not have considered that your bank may not easily agree. If your bank considers your line of work a risky business, they may not be very forthcoming with the offer of conducting your credit card processing. This is because banks are wary of small businesses, particularly mail order and home-based businesses, for fear of potential fraud and abuse.

According to the Electronic Transaction Association, approximately 85 percent of credit card transactions now go through credit card processing companies. A credit card processor is an established service provider who uses a merchant account to process payments for other businesses. Thus, a credit card processor essentially stands between your business and the merchant account.

Here’s a word of caution: Different processors charge different prices and types of fees for their services. Mainly the charges come in the form of the "discount rate" — a regular percentage charged on each transaction. There may also be flat transaction fees. A processor that offers a low discount rate will probably look to make up for it through a huge application fees or statement fees.

The success or failure of your online business depends a great deal on the efficiency of your credit card processor. Timely payments, no undue deductions, reasonable charges etc go a long way to help you maintain a healthy inflow of capital. Thus, you need to look for companies with well-established track records and solid reputations. This is the best way to avoid scam artists trying to take advantage of the explosion of e-commerce.

It is a good idea to compare prices of different processors before settling for one. While Credit card processors´ discount rates can be as low as 1.5 percent, they may go as high as 5 percent too. Fee schedules are usually set in accordance with the average transaction figures and the number of monthly transactions.

If you sell small volumes of inexpensive items then you are liable to loss as a lot of money will go out in the form of fees. In such a scenario, a merchant may look out for a processor who has a minimum monthly charge and make sure the additional credit card sales justify the expense.

Finally, ensure that a processor exercises no deception in his ways when dealing with you. If you must do business with a new processor with no track record, lay down your rules early and firmly and start the relationship off slowly. Keep the business with them to a minimum until they’ve proven themselves worthy. And no matter how much you need the business, do not initiate payment processing until you have a signed contract clearly stating and agreeing to payment terms.

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Selecting Credit Card Terminal Receipt Printers

With a credit card processing terminal, you also need either an in-built or an independent printer to print out receipts and slips for customers signatures. Just as is the case with the terminal, your choice of printer must be based on the factors of cost, reliability, need and speed. In addition, you need to choose between a thermal and dot matrix printer. Whichever you get for your business, make sure that it has the latest “drop-in” paper loading feature, making the sales process easy and hassle-free.

Dot Matrix Printers- Dot Matrix Card Terminal Receipt printers use ink ribbons, pins and regular paper. They are recognized as being one of the world’s most reliable ranges available. These printers are capable of printing a receipt with up to two copies, which on some models can be held on a rewind. Dot Matrix printers are essentially low-cost, compact, reliable, high-speed, and with a full or partial cutter, available in either single or dual colour versions. Some Dot Matrix models are revolutionary, with high performance, multifunction, enhanced features and abilities. Dot Matrix Printers are ideal for versatile slip, check, and invoice applications. You may have your pick from the various models and brands available in the market today.

Thermal Receipt Printers- Thermal credit card receipt printers are more popular owing to their faster performance (with speeds of 10 to 15 lines per second), less noise, and greater reliability. These printers are a little more expensive than Dot matrix printers but encounter lesser technical glitches. A thermal printer works with heat and special heat-sensitive paper to generate receipts. Available in tear bar and auto cutter models, these printers provide absolute value for money.

Inkjet receipt printers- Inkjet is the newest technology in receipt printing. It offers the color advantages along with printing fast and clear, and the overall cost of ownership is similar to that of a thermal receipt printer. Inkjet printers come with standard features of an Inkjet, two-color, receipt & slip printing, power supply and cables. Different models may have different functions and features to enable you to select just the right equipment to meet your unique needs.

If your counter top is already cluttered, your best bet would be to get an integrated machine/printer combo unit for your storefront. You may, if you want, look out for refurbished receipt printers. Whatever your choice is, do complete any swipe terminal with a receipt printer so your customers can have a record of their purchases.

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Merchant accounts as internet payment solutions

Merchant accounts have emerged as top solutions in online payments. It is the merchant service that enables you to have secure financial dealings online. This service enables your companies to accept Visa, MasterCard, American express and other credit cards. These products reduce your need to maintain a credit card account or maintain accounts receivable, helping you save money. The merchant account service providers enable you to have better cash flow and improve your customer service.

Internet Customers choose the Merchant products and services through the shopping card facility over the merchant websites. However, the shopping card connectivity to the payment gateway is the backbone of seamless online transactions. Merchant accounts acts as one of the most secure, reliable, cost-effective systems for authorizing payment and managing transactions. It acts as an effective method to manage the difficult, complicated, and expensive infrastructure and systems.

The process usually adopted in a typical retail purchase on the internet is as below:

1.The customer has to fill his shopping cart on a merchant website and proceeds to check out.

2.The transaction information is then transmitted to the merchant server.

3.The web merchant forwards a digital order to the company server in an encrypted format.

4.The company authenticates the merchant and provides a payment options and payment details screens directly on the customer's browser over a secure connection.

5.The customer provides his Credit Card details, which is directly sent to the payment server.

6.The Credit Card details are then forwarded to the respective bank for authentication. A message is then transmitted by the bank to the card holder issuing the bank for payment authorization. The issuing bank authorizes the payment and transmits the confirmation back to the payment gateway through the acquiring bank.

7.On receiving authentication and authorization, the company forwards the validation of the payment instrument to the merchant server.

8.The merchant transmits the acknowledgement of the payment to the customer's browser.

The entire process integrates seamlessly with the shop and buys application of the web merchant ensuring a pleasant shopping experience for the customer. The Credit Card details of the customer remain unknown to the net merchant.

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Security in Online Credit Card Processing

Online credit card processing is at a risk of online fraud. Security being at stake is a big issue for any business and its clients. Thus, your credit card processing service provider must ensure that you have no worries on the online credit card processing front as you get bigger in your operations in the online world. Following is a list of key security measures that credit card processing service must take: -

• Rigorous precautionary measures to guarantee that vitally sensitive information, such as your customer's personal information and their credit card details, are protected.

• High End Secure Payment Gateways must be utilized for your customers' entire credit card Authorization.

• The personal information and credit card details of customers must be encrypted before it is transmitted over the Internet to the bank payment gateway.

• Security firewalls ensure maximum protection of your customer's details. This guarantees that your information is inaccessible to any third party.

• Your merchant account provider must use what is known as an industry-standard SSL (Standard Sockets Layer) Technology, which is used worldwide for data encryption while processing credit cards. This facilitates secure online credit card processing.

• Pursue strict internal security guidelines for ascertaining confidentiality of customer information.

• Robust risk management tools and fraud filters such as Risk Management Rules, Parameters, Negative Files, and Risk Management Queries make your E-commerce transactions safe and confidential.

In short, you need to choose a service provider who can offer you the benefits of the latest technologies without you having to change your interface. Stay ahead in the extremely dynamic backdrop of E-commerce. No matter how quick the transactions develop in volume, and in spite of your website size or hosting environment, things on no account go out of control.

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Telephone Credit Card Processing Services

Touch-tone telephone processing is low cost and simple! Credit Card Processing works with any touch-tone phone, be it a cell, portable or cord phone. The procedure too is very simple. All you need to do is dial the 800 number using the phone. Follow that by punching in your merchant ID, and then enter in your customer's credit card information including number, expiration date and amount of sale. This can be done on the phone keypad and there is no need to purchase any extra expensive equipment.

You will be provided with a confirmation number once the transaction is approved. Funds will then be transferred to your business checking account within 2 to 3 business days. You don’t have to deal with any of the sales slips, deposit slips, or any extra equipment. You may use your phone to track your daily sales. Also, at the end of each month, your transaction details will figure in your monthly statement.

Credit card processing with a telephone is secure and cost-effective! Especially for start-ups and Home Based Businesses, telephone processing is a great option. Telephone Credit Card Processing Services are beneficial for small-volume merchants who want to accept credit cards but would like to avoid the cost of buying or leasing point-of-sale equipment. The touch tone telephone has easy-to-follow voice prompts that guide you through the transaction. As your business grows, you may change your services from telephone processing to a high-speed POS terminal.

Telephone Credit Card Processing is perfect for contractors, delivery, trade shows, craft shows, seasonal businesses, taxi and Limousine Services and more!

Telephone processing is not your best choice if your business sales volume is higher than $1,500 per month. In that case, you must consider point-of-sale terminals for your transactions or look up other processing options.

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Choosing the Right Credit Card Terminal

There is a wide-ranging variety of credit card terminals available in the market today. You can have your pick! However the wise business decision would be to choose a credit card terminal that addresses your needs.

Firstly, do you even need a credit card terminal? Your answer should be a definite “Yes”, if you own a retail shop or a restaurant or any other business storefront that requires face to face interaction with the customer. In these cases, the customer may want to pay via his credit card. In the physical presence of the credit card any transactions made using a credit card terminal is virtually safe and secure. When a sale is to be completed, the credit card is swiped through the terminal and the processing of the payment begins from there!

This is how a credit card terminal works. At point of sale, a customer’s credit card is swiped through the machine and he is asked to type in his numbers on the terminal keypad. The payment is then processed. Most often than not, the in-built printer or a separate printing device attached to the terminal directly prints two receipts; One is given to the customer to keep, the other one is signed by the customer and retained by the merchant.

A credit card terminal is also used by mail order or Internet order businesses, in which the card is not physically present. The merchant is required to punch in the credit card information into the terminal to process the payment. The other way around, which is advisably a better option for these businesses, is to use credit card processing software or an Internet payment gateway.

Another point that would influence your shopping for a credit card terminal is the cost factor. A credit card terminal can be purchased at a price anywhere between $119 to more than $1000. The cost of a terminal would probably depend on its expected life, the features it offers and the presence or absence of an in-built printer.

You may take a look at the variety of terminals available to you as you make your decision. Following are a few important points
• If you have multiple businesses and different merchant accounts for them, you may want to purchase a credit card terminal that can cater to more then one merchant accounts. In fact, there are terminals available in the market that can support as many as nine merchant accounts. This kind of equipment is meant for you if you intend to use it for multiple businesses.

•Credit card terminals usually dial out using a phone line. This can be a shared line with a modem and fax machine attached to it. However, it is recommended that you do not activate call waiting on this line, in order to conduct undisturbed transactions and credit card processing.

•Using IP connections instead of a phone line not only cancels out the need for an extra phone line but also quickens the credit card processing by 2-3 seconds per transaction.

•There is also the option of a wireless terminal. This provides the convenience of portability, without the need for a phone line or an Internet connection.

•If a wireless terminal doesn’t’ fit the bill and a phone or Internet connection isn’t available, you may choose a terminal with store and forward capabilities. You can enter the information into your terminal and process it later when you have access to a phone line or Internet connection.

•You may also accept payments through ATM cards, for which you will need a PIN pad.

With all this information, it should be easy for you to decide which type of terminal is best for your business needs. Research the price and make a purchase that will only add value to your business!

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Special Credit Card Terminal Features

A credit card terminal is a product designed to save merchants time and money by providing powerful features and performance at point-of-sale. It is a cost-effective solution for business of all types, be it brick-and-mortar merchants, e-Stores, or mail-order/telephone order stores. All credit card terminals do have the same basic functions and features. There are special features that you might want incorporated in your credit card terminal for increased efficiency, such as:-

• A credit card terminal that accepts debit cards- This is a good feature as, in addition to credit cards, merchants are able to complete debit transactions. For this you will need some means to enable the entering of the PIN by customers. An additional PIN pad may be utilized or this may be done directly on the terminal. This is convenient for both the merchant as well as the customers.

• Issuing and acceptance of Gift Cards- Certain credit card terminals can handle gift cards. In addition, there are several credit card terminals that support other forms of payment, such as phone cards and electronic bank transfers (EBT). Your decision of purchasing such a credit card terminal must be guided by the volume you witness in these alternative payment methods. If the volume is high then you should look for a credit card terminal that supports them.

• Address Verification System (AVS) - This feature, as is evident, helps verify addresses. It provides additional security for transactions. This is done by comparing the address on a customer's ID with the billing address of the credit card. AVS works very well to reduce the incidence of fraud. With its increasing popularity, more and more credit card terminal manufacturers are incorporating AVS as a regular feature now.

An important point here is that the high-end terminals with lots of features that you may have an eye on, must also suit your business. Paying extra for a terminal, the features of which you’ll never use, is a waste of money. Do not buy a terminal that just looks fancy but doesn’t work for your business. Finally, whichever brand or model you choose, keep it clean and away from dust, crumbs, and paper lint, all of which can clog printers and gum up stripe readers. Keep a can of compressed air handy to clean your terminal and help it last longer!

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What Type of Credit Card Terminal You Need?

Credit card terminals are a very common site. All retailers, restaurants, business outlets keep this machinery handy to offer convenience to their customers. It’s an easy process to pay via a credit card. Also, credit card processing allows businesses to process payments efficiently and securely. A credit card terminal can have an enormous impact on your business. Other than a credit card terminal you may need other supporting equipment, or you may need a new credit card terminal or want to upgrade your old equipment. Whatever your needs are, you’re sure to find the equipment that best fits your needs.

The first step of purchasing credit card equipment is determining what type of credit card terminal do you need? The equipment is not particularly expensive and the types you can find in the market include traditional credit card terminals, with or without printers, wireless credit card terminals and virtual or software-based credit card terminals.

Traditional credit card terminals:- These terminals have the basic features of a magnetic stripe reader, a keypad to enter prices and other information, and a small display. The printer can either be built-in or a separate add-on machine. You may find variation in the size of the screens. The bigger the screen, the more information you will be able to view at once. Also back-lit displays are now easily available. Keypads also vary in size. Ease of use along with the features must be your concern!

Wireless credit card terminals: - These are very useful for businessmen who need to change location often. For instance, a taxi driver or a seasonal vendor can greatly benefit by accepting payments via a wireless credit card terminal. Wireless credit card terminals have built-in printers and the factors to consider before purchasing include battery life, range, weight, and shock-resistance.

Virtual credit card terminal: - If your business is exclusively conducted over the phone or the internet, a virtual credit card terminal is a must-have for you! For this your merchant account provider should be able to provide POS software that handles the transaction.

You are going to use your credit card terminal in conjunction with your merchant account. All you need to do is program your equipment to connect with your provider. In case you purchase the equipment from your merchant account provider, chances are it will come pre-programmed for you! Else, there is a wide variety and an array of brands of credit card terminals available in the market. You can have your pick!

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