6 Do’s and Don’ts for Small Business Credit Card Transactions

| March 21, 2014 | Financial Wisdom

Small business can’t afford the financial setbacks caused by credit card fraud. Years ago you had to look up every number in little books that came monthly to ensure that customer wasn’t trying to rip you off. Today, we use a POS terminal or iPad as a checkpoint to ensure the validity of your sales. To get the most out of offering your customers the choice of paying with a credit card, and to avoid becoming a victim, here’s a little business advice.

1. Do allow customers to pre-order goods.
Customers appreciate fast and efficient service, pre-ordering allows them to purchase new items without dealing with long lines or fighting crowds.

2. Don’t skimp on information or neglect to ask for the Address Verification Service.
For online sales, always ask for full credit card information in your shopping cart. You want the type of card, full credit card number, date of expiration, full name as it appears on card, billing address and the Address Verification Service (the security code on the back). When you input the security code into the address verification service it goes straight to the bank to verify the information. If the customer has a stolen card or is working off of a receipt, the security code will not be available. That extra security helps to reduce your chargebacks, which saves you money.

3. Do only ship to the cardholder’s billing address.
If a customer requests for something to be sent to a location other than the billing address, you may consider not accepting the order. If the order is an usually large next day shipping request, that should raise a red flag for possible fraud and you should consider rejecting it. You don’t want to take the chance of the card being fraudulent. Credit card companies and banks will not refund your money and you’ll just be out of luck.

4. Don’t forget to read your contracts to avoid hidden fees.
Read your contracts with the credit card companies, all of it, even the fine print. You want your agreement for fees to be transparent flat rates. If you find some sort of hidden fees after the fact, don’t hesitate to cancel the contract and shop around. You should also shop for lower rates once every other year; there’s a good chance you will get one.

5. Do use your company’s ability to take credit cards as an incentive to shop with you.
Credit cards are a privilege and convenience, so use it to your advantage. Customers love anything that makes it easier to spend their money. Use terms such as “buy now, pay later”. Add familiar credit card company logos to your front windows, next to the cash registers, and also in your ads and promotion. They may just spend more.

6. Don’t forget to physically see and hold the card if you are a brick and mortar retailer.
I had an employee boast he had made a $2000 sale to one guy at the end of the month. It was only later I learned he had taken a phone order, entered the information by hand into the terminal, obtained an approval and someone came in to pick it up. Phone orders are ripe for fraud. Treat them like you would online sales and if they come in to pick it up, have them bring the card with them.

Using common sense when it comes to proving who is using the card will keep you from getting chargebacks. Training your employees on a strict system of acceptance will keep everyone happy.