Every so often, I’ll have an e-commerce client ask me “Will I ever be able to accept PIN-based debits online?” Although many companies have tried to devise a solution, I never seriously believed it would happen. After all, how could a consumer enter a 4-digit PIN from a personal computer and still meet the high encryption standards required for Payment Card Industry (PCI) compliance? Nevertheless, the topic is resurfacing again, and online PIN debits may finally be just around the bend.

The primary reason e-commerce merchants want to accept PIN debits is the savings. As I explained in this article I posted several months ago, brick-and-mortar merchants with high-dollar average sales can save considerable amounts by requesting PIN numbers from customers. But the PCI rules requiring that the debit card be swiped through a magnetic card reader and that the PIN number be encrypted have kept online merchants from participating.

In her June 2009 article for Transaction Trends magazine, Julie Ritzer Ross profiles software and hardware developers that are on the leading edge of finding a workable solution. PaySecure, from Atlanta-based Acculynk, is currently being tested by some of the largest players in the debit network business: ACCEL, NYCE, and Pulse. PaySecure’s software will place a floating “keypad” on a shopper’s screen, receive the PIN, scramble and encrypt it, and then pass it along to the appropriate network. Hardware developer, HomeATM ePayment Solutions, recently introduced Safe-T-PIN, a small and inexpensive USB card reader that allows consumers to swipe their own credit cards while shopping online. It’s going to be the combination of these, or similar, software and hardware components that eventually makes online PIN debits a reality.

But before you rewrite the payment options in your e-commerce shopping cart, keep reading. Before credit card processors will begin supporting these solutions, they’ll need to feel pressure from their merchants. And for merchants, the pressure will have to originate with their customers, since it’s the consumers who’ll purchase the hardware. So, in the end, it’s going to depend on when and how widely the American consumer adapts to this new technology.

You’re probably asking, “Why would consumers want to purchase this equipment anyway?” After all, it’s the merchants who will reap the cost savings, not the consumers. According to Ross, PIN debit payments offer shoppers “perceived security.” Among the 550 shoppers who participated in the testing of PaySecure’s software, a whopping 79% of them said they felt more secure shopping online with their PIN than without it. Economic conditions may be another force that drives consumers to adopt online PIN debits. In a time when many shoppers lack the ability or the will to pile more debt onto their credit cards, debit cards are becoming their preferred payment methods. The thought of compromising their debit card (in effect, their entire checking account) may spur the acceptance of online PIN debits by consumers.

When this technology finally does make its way into the homes of America’s shoppers, it will be a day for merchants to celebrate. It’s rare that something comes along that benefits business owners more than consumers or credit card companies. And with the struggles of the past year, it’s about time merchants caught a break!

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

I don’t normally blog here about things of a personal nature, but I want to update you on a post I wrote this past December. In that post, entitled “What will it take to succeed in this economy?“, I told you about my 14-year old son’s new-found desire to become a competitive swimmer. (Despite the title, no, I’m not going to talk about the economy. I’m sick of hearing about that!)

Will at the Gabrielson Natotorium at UGA

In that first post, I described how my son, Will, had impressed me by attending early morning practices during Thanksgiving break. To summarize, I said that to succeed in swimming (or anything else), the participant must first choose to succeed, and then commit to doing whatever it takes. I compared the road that lay ahead of my son to the struggles faced by small business owners, and I tried to draw some parallels. A lot has happened since that time, so let me bring you up to date.

Will continued to work hard as a ninth grader on his high school swim team, and at the end of the season, he asked if he could join the Flint River Rapids, a local team that trains and competes year-round. We agreed, and so the twice daily practices and long drives to and from Albany State University began. Although his dedication wavered a bit at first, he bounced back as the school year ended, and he’s trained extremely hard through the summer.

A week ago, I got a call from Jeff DeMott, Will’s swimming coach. Four of the team’s older swimmers had qualified to swim as a relay team in the Georgia Seniors State Championships held at the University of Georgia in Athens. However, two of the boys had backed out, so the team would have to replace them or skip the meet.  Ordinarily, Will would not have been considered because the meet was for swimmers 15 years of age or older. (In fact, some of the swimmers at this meet are college students representing NCAA universities during the school year.) But the coach had seen Will’s potential, and he offered him the chance to attend. Opportunities like this are very rare for someone Will’s age.  It was his coach’s intention to motivate him by letting him compete among some of the fastest swimmers in the nation.

I’m writing this from my hotel room, following the first day of the big three-day meet. We knew going in that the relay team didn’t stand a chance at winning. In fact, a national record was broken today in the women’s 800-meter freestyle relay (just before our men’s team swam their last event of the day.) Instead, this is one of those times when it really is enough just to be there and do one’s best.

In case you’re wondering, Will swam faster today than ever before. This experience is giving him a new perspective on swimming and his future. He’s enjoying himself immensely, and he deserves it! I can’t wait to see what happens tomorrow.

Would it be easier to manage your business if you knew your fixed costs were just that, fixed, for the next 12 months? How about 24 months?

Are you tired of explaining to customers why you raised prices again? Or do you just absorb rising costs to keep customers from going elsewhere? During the next year or two, how much more will you have to pay for inventory?  How about your insurance, rent, gasoline, utilities, wages…? It’s all going up.  And with the printing presses at the U.S. Mint heading into overdrive, the sky might be the only limit for inflation.

Well, here’s one cost you can count on not to increase for the next 20 months. For every new merchant account we open through the end of July 2009, we guarantee there will be no price increases until the end of March, 2011. This applies to all 4-tier retail accounts and 3-tier e-commerce/mail order/telephone order accounts. This offer does not apply to Cost-Plus merchant accounts.

Ordinarily, discount rates are adjusted annually (or even more frequently) to keep up with the Visa/MasterCard/Discover increases. But your discount rates (qualified, mid-qualified, and non-qualified), your item fees, your gateway fees, everything will be locked. When we agree on a rate plan, you can count on it!

Even with today’s uncertain credit markets, you can know your credit card costs will remain under control.  But this offer is only available to merchants opening a new account before the end of July 2009.  Hurry!  Time is running out.

If you’re involved with e-commerce (and you don’t live under a rock), then you’re probably aware that Authorize.net, the biggest, and arguably the best, payment processor around, experienced a failure of Biblical proportions this past Friday morning.  A fire in their Seattle, WA data center brought them (and the 238,000 Internet businesses that depend on them) to their knees.

For the record, I’ve been a fan of Authorize.net for years.  I used another processor in 2000 while first getting started in e-commerce, but we soon changed to Authorize.net.  Their service, features, and cost were (and continue to be) superior to their competitors.  I have many e-commerce clients today who rely on their payment gateway.  That being said, Authorize.net dropped the ball on Friday.  What remains to be seen is whether they will fumble or retain possession of the ball.

If your e-commerce business uses Authorize.net, you were certainly affected and probably lost money as a result.  So that your money wasn’t lost in vain, let’s look at what happened and try to learn a thing or two from Authorize.net’s mistakes:

1. Have a backup plan that includes worst-case scenarios, and test your plan. I don’t know exactly what Authorize.net did wrong.  I don’t know their business any more than I know yours. But I do know that when they shifted their traffic from Seattle to their backup data center(s), something didn’t jive. It may have been due to increased traffic resulting from millions of holiday promo emails. It really doesn’t matter. They knew it would be a busy weekend, and they weren’t prepared to handle what happened.
2. Have a communications plan, before you need it. If your business is dead in the water, how will you notify those who depend on you? How will you answer their questions? And, perhaps most importantly, how can you be sure your customers will believe you instead of rumors circulated by others? I was in a meeting with a large e-commerce client when I first heard about the outage. He read a Tweet about it online. His business website was down, and the owner learned why through Twitter. That’s amazes me! Authorize.net signed up for a Twitter account, but not until about 11:00 a.m. EST Friday. Within minutes, the Authorize.net Twitter account had more than a thousand subscribers awaiting updates. Authorize.net used Twitter to disseminate information to their merchants, and it was the only reliable source of information throughout the weekend.  I’m still getting updates via Twitter, including one a few minutes ago (7:30 p.m. EST) announcing they are finally back up to full speed.
3. Answer the phone! I understand that most of us don’t have 238,000 customers calling at the same time. It’s not possible to answer that many calls right after disaster strikes.  But I spoke to many merchants today (3 days after the fact), and none of them had been able to get through to Authorize.net.  Make every effort to answer your phone, even if you know the caller is going to be angry.
4. Post updates on your website. Many of my clients were unable to log in to their Authorize.net accounts. That’s understandable considering what happened. But their homepage was up throughout the weekend.  Knowing that businesses across the country were down, Authorize.net could have at least posted a simple message on their homepage. Any news would have been better than no news at all!
5. Don’t pat yourself on the back while your clients are still hurting. This one should be obvious; in fact, I’m still shocked that Authorize.net had the guts to do it. Driving home from my client meeting at about 3:00 pm Friday, I received another Tweet from Authorize.net.  The author was congratulating everyone on “the team” for the outstanding job they were doing.  There was no mention of how their downtime was affecting businesses. Next time, Authorize.net, apologize for your problem before congratulating yourself for fixing it!
   
6. Don’t make promises you can’t keep. Authorize.net Tweeted all weekend about how this was finally working and how that would be working soon.  More often than not, they were wrong and had to retract statements. Remember that your clients are making promises based on the promises you’re making to them. If you’ve already let them down once, down let them down again.

As of 5:00 p.m. EST Monday, Authorize.net was still having problems (three and a half days after the event occurred.) Shopping carts were still timing out, many shoppers were still unable to order, and Authorize.net’s website still posted no information whatsoever. Please learn from this, Authorize.net! Your merchants are watching.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

For years, I’ve been a supporter of the Address Verification Service (AVS), especially when it comes to e-commerce. I’ve seen it protect merchants from thousands of dollars in loses. As a former e-commerce business owner myself (co-owner of 2BigFeet.com), I used it to identify and prevent countless fraudulent orders that would have otherwise resulted in chargebacks. But too often, I hear stories from business owners about a time when AVS flagged an order from a “good customer.” As a result, some merchants have lost faith in the system and have abandoned it altogether. Just because of one or two bad experiences, these merchants willingly risk accepting bogus orders (and certain chargebacks) rather than risk angering good customers with false positives.

Most e-commerce businesses use AVS to reject fraudulent orders before they ever reach your fulfillment department, so you typically won’t know how many were blocked. And, since criminals don’t usually call and complain about their rejected orders, the false positives receive a disproportionate amount of attention. That being said, I’ll agree that AVS is not perfect. But many of the problems that legitimate customers experience are the fault of card issuing banks, not the AVS system itself. If you’ll follow the steps outlined in this post, you can reduce your false positives to a manageable number and benefit from the added security AVS offers.

1. If your customer’s order is rejected, she’s already going to be disappointed. First, and foremost, don’t allow your shopping cart to make the situation worse! The goal here is to have the affected customer call your customer service number immediately. Some carts use default messages that were obviously written by cold-hearted programmers, not warm-hearted customer service professionals. If you don’t know what message your rejected customers are seeing, put yourself in their shoes. Place a test order using a bad address. If the resulting message could make customers feel at fault or ignorant, change it. Avoid words like “mistake.” (Men, if you’re not the warm, fuzzy type, get a woman to help you.) Make sure your customers believe you really want to help fix this minor issue, or they’ll leave without giving you the chance.
2. Often, the customer will have already called the card issuing bank prior to calling you. If the bank told the customer the charge was approved (indirectly placing the blame on you), the customer may already be irritated when you answer the phone. You should understand, and be prepared to explain, that all orders must be approved by both the card issuing bank and the payment gateway. Since the bank only verifies the customer’s available credit, it will approve most orders. But your gateway checks addresses using the AVS system. And if the gateway is not satisfied with the AVS results, it will deny the order (even if the bank has already approved it.)
3. When the customer calls, apologize for the inconvenience. Explain that the problem could be the result of a bank error. Assure her that you’ll do everything possible to get the order approved. Finally, ask the customer if she has changed addresses within the past five years. Although this may sound like a strange question, it is very important. If the customer ever received her credit card statements at another address, regardless of how long it’s been, ask for that address. Beg for it, if necessary, even if she assures you that she’s shopped elsewhere using her new billing address. (Due to different merchants, different payment gateways, and different AVS thresholds, your business could refuse an order that another business might have approved.)
4. Try the order again, using the old billing address in place of the newer address. For reasons I don’t completely understand, inserting the old address corrects the problem about 75% of the time. It’s my theory that some banks’ computers use one set of address fields for mailing monthly statements and another set of fields for AVS. I suppose that when customers move and notify their card issuing banks, the banks may update the fields used for statements and forget to update the AVS fields. I haven’t been able to confirm this, but it makes sense. Using this approach, I’ve seen orders approved using addresses that were 5 years out-of-date!
5. If this doesn’t work, you should apologize and ask the customer to try another credit card. If the customer doesn’t have another card, you’ll have to choose to either a) disable AVS long enough to force the order through, or b) turn the customer away. In my seven years of e-commerce management, during which we approved tens of thousands of orders, I could count on one hand the number of times I had to make this choice.

Hopefully, this procedure will help you get more out of the Address Verification System. Keep in mind, though, that AVS does have other limitations. AVS usually will not verify customers with billing addresses outside the U.S. And if your customer is using a card issuing bank located outside the U.S., AVS may experience problems there, as well. Otherwise, you should be able to count on the AVS system to work nearly 100% of the time.

I’m happy to provide this information free of charge. If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts. You can also follow me on Twitter, where I regularly post short tips. I promise to never spam you or pressure you. Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

Let’s face it. Every processor is going to do things to make you unhappy from time to time. But that doesn’t necessarily mean you should leave them. For instance, all processors have to earn a profit, so don’t expect to find one with no fees whatsoever. (As an e-commerce owner myself, I had a goal to pay $1 million in credit card fees. Can you imagine the sales I would have needed?) And all processors have to respond to chargebacks by debiting your account, so don’t blame them if a customer files a complaint against your business.

Basically, as long as your processor is giving you outstanding customer service and charging reasonable fees, I’d give them the benefit of the doubt and stick with them. But there are several practices that you should never have to put up with – clear indicators that your processor is more concerned about their own profits than your success. This post focuses on three of the most blatant examples. If you find your processor is engaging in any of these practices, it may be time to move on.

#1 – Double-Dipping

I don’t know of an industry term for this practice, so I just refer to it as “double-dipping.” Here’s how it works. You expect to pay a discount rate on every credit card sale your business makes. (I didn’t say you like it, just that you expect it.) Using round numbers, let’s look at a $1,000 transaction with a 2% discount rate. Your discount will be $20.  As long as you factored in an adequate margin and your customer remains happy with the purchase, you’re in good shape.

But in reality, some customers won’t be happy, and they will return their purchases for a refund. (It’s hard to blame the customer, because we’ve all had to return something.) Many processors actually charge you a second time when you issue the refunds. With those guys, you’d pay 2% on the sale, and another 2% on the refund. Now, you’ve paid $40 in fees, and you have absolutely nothing to show for it. It doesn’t seem right, does it?

Most processors (at least the good ones) will calculate your discounts based on your gross sales alone, disregarding any refunds you issued. Double-dippers, on the other hand, charge discounts on gross sales plus refunds. (Notice, I didn’t say gross sales minus refunds. Charging discounts only on “net” sales would be great, but that’s not gonna happen.) Some processors use complicated statements to disguise the DD practice. But you can download my free whitepaper, “Digging for the Truth in a Deceptive Merchant Statement“, where I explain how to recognize when you’ve been victimized.

#2 – Daily Discounting

For me, the process known as “daily discounting” is even worse than double-dipping. Instead of taking your money, these processors steal your time and your sanity! As business owners, we all want to be in control of every aspect of our business, including our books. If you’re like me, you balance your business’ checkbook religiously, always looking for errors. This process is complicated enough already, but it’s nearly impossible if your processor takes discounts on a daily basis.

Monthly discounting is the industry standard, so most processors wait until the end of the month to take their fees. Let’s look at a typical business day ($1,455.68 in total credit card sales and an average discount rate of 1.79%) to understand how each method affects you:

Monthly discounting – You record your daily deposit of $1,455.68 in your checkbook. Then, in a day or two, that exact amount appears in your bank account. When your bank statement arrives, that amount is shown again as a daily deposit. It’s easy to reconcile your bank statement because the deposits all match. The discount due for that daily deposit (1.79% x $1,455.68 = $26.06) will be combined with the rest of that month’s discounts, and will be debited from your account during the first few days of the following month. In essence, you get your money right away, but the processor waits until the next month to get theirs.

Daily discounting – You record your daily deposit of $1,455.68 in your checkbook. A day or two later, a deposit for $1,429.62 appears in your bank account. Your processor deducted their $26.06 in fees before they paid you. When your bank statement arrives, $1,429.62 is shown again as a daily deposit. Your checkbook and your bank statement both show your month’s deposits. Unfortunately, none of the numbers match, and trying to reconcile your bank statement becomes a guessing game, at best.

Daily discounting should be reserved for businesses with poor credit histories that are considered high risk. But some processors subject all their clients to this practice just so they’ll get paid faster.

#3 – Monthly Minimums

Monthly minimums rarely have any affect on larger businesses; it’s the small start-ups that suffer from them. During the seven years that I sold shoes online as co-owner of 2BigFeet.com, we used several processors. Most of them subjected us to monthly minimums. Even though we always paid more than the required minimum discount, it still made me mad just knowing the minimum was there.

For obvious reasons, processors like big businesses with large credit card volumes. The more money you make, the more the processor makes. Some processors have a problem with merchants who have occasional slow months; those processors don’t like to see their own revenue drop. To insulate themselves against those times, some processors impose a minimum monthly discount. And if the merchant doesn’t process enough credit card transactions during a given month to reach the minimum amount in discounts, the processor will debit the merchant’s account for that amount anyway.

This practice really only hurts small or seasonal businesses such as lawn maintenance, water sports, hunting reservations, etc. Most average-sized businesses have no trouble meeting the minimums. Nevertheless, it just doesn’t seem right to penalize a business that’s obviously had a tough month already.

I know from personal experience that running your own business is tough. You need your credit card processor to be on your side – working with you, not against you. If you’re using a processor who engages in any of the above practices, you deserve better. There are some outstanding processors available to you, and I’d be happy to recommend one if you’ll give me a call.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

In this economy, nobody wants to pay more than necessary for credit card processing. But don’t waste time yet looking for a new processor (unless you plan to try me) just to save a few basis points. Stay put for now, and keep reading. I’m going to tell you about a simple policy change you should make at your business. If you’ll follow my instructions, I guarantee you’ll see an immediate savings every month, and it’ll be more than just a few basis points!

This scenario occurs in nearly every business, but particularly in e-commerce businesses. A customer places an order for one or more items. Let’s say the total cost of the order is $179.50. You process their credit card and collect an authorization number. At some point before you’ve shipped the order and captured your payment, the customer calls back to make a change. Maybe they want to change the shipping address or method. Or maybe they want to change the order itself – more products, less products, or just different products. Regardless, they change something, and that changes the total cost of the order. You probably see this everyday, and you make the changes without ever complaining.

As you already know, the original authorization is good for any dollar amount up to, but not exceeding, $179.50. Any additions to the order that drive the price up will require you to get a new authorization. But what do you do when the changes cause the total cost to drop? If you’re like many merchants, you leave the authorization as-is, and you later collect the new total by manually entering the reduced dollar amount. After all, the original authorization is still valid for up to $179.50, right?

If your merchant account utilizes Cost Plus pricing, you’ve almost certainly seen line items that say “Electronic Interchange Reimbursement Fee” (EIRF) and the corresponding higher discount rates. If your merchant account utilizes 3-Tier or 4-Tier pricing, you may not have seen the term, but you’re still paying for it every month among those transactions downgraded to Non-Qualified.

The Electronic Interchange Reimbursement Fee is assessed when an authorization is settled for any amount other than the authorized amount. This usually occurs when the price dropped due to a change, and the original authorization was used to capture the funds. Let’s look at the $179.50 authorization again. Suppose the customer changed from Second Day to Ground shipping to save $10. When you capture $169.50, your transaction will be downgraded due to EIRF. Cost-Plus accounts will see the actual EIRF rate on their monthly statement. Those accounts with 3-Tier or 4-Tier rate structures will see the transaction downgraded to Non-Qualified. Either way, this will cost you an additional 1% of the total, on average. That means you’d pay about $1.70 more than necessary in fees, just because of the change in shipping rates.

“OK, so how can I avoid these additional charges?” you ask. It’s simple. Make it a habit (or better yet, make it a policy) to get a new authorization number whenever you change an order’s total. Yes, you’ll be charged an additional item fee, but that shouldn’t be more than $0.25. For large orders, in particular, the savings will really add up.

Was this cost saving tip news to you? Hopefully not! If your agent is watching your back, he/she should have already talked to you about it. If not, I’d appreciate the opportunity to earn your business. If you have questions about this or any other topic related to credit card processing, please don’t hesitate to give me a call.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

If you use a credit card terminal, and you’ve had it reprogrammed in the past year or two, you may have noticed some new steps were added to the checkout process. In these steps, the terminal may prompt you to enter additional information about the card or transaction. Unless you understand the purpose of these steps, you may see them as a waste of time and even be tempted to skip over them altogether. But doing so would be a mistake! In this post, I’ll explain the four most commonly used security features found on credit card terminals.  I’ll tell you what information your terminal is requesting and how it benefits you to supply that information.

1. Zip Code and/or Street Number – This information is usually requested when you hand-key a transaction received by phone, mail, or online. When you enter the card number and submit the authorization request, the address information, along with the dollar amount, is sent to your customer’s card issuing bank for approval. Banks that participate in the Address Verification Service (AVS) will compare this information to their customer files to ensure you have spoken with the actual cardholder. (The theory is that bad guys shopping with stolen credit card numbers won’t have access to the address and zip code.) Skipping this step adds unnecessary risk, and will probably result in the transaction being downgraded. In other words, the acquiring bank (represented by your credit card processor) will charge you a higher rate because you made the transaction riskier than it would have been otherwise.
2. Enter the Last 4 Digits of Card Number – You may have seen this security feature and thought it was a waste of time if no one explained the importance of it. Stolen credit card numbers cause problems for banks and merchants alike, but the problem used to be limited to stores that accepted orders by phone, mail, or online. But now, bad guys can buy equipment allowing them to erase and re-record magnetic strips. This means they can steal authentic credit cards, erase them, and reload the cards with data stolen from other people. These respectable looking cards can then be sold on the streets and used in any retail store. To defend against these cards, merchants are prompted to enter the last 4 digits embossed on the card. If the card has been reloaded, those numbers won’t match the numbers on the magnetic strip. The charge will be denied, saving you from a costly chargeback.
3. Order Number or Market Data – Depending on how your account was set up, your terminal may request an order number when you enter hand-keyed transactions. If you’re prompted for this information, don’t skip it. Doing so may result in the transaction being downgraded. If you prefer, you may be able to speed up this process by entering a single digit (i.e., 1) for every order. Check with your credit card processor to be sure.
4. CVV or Security Code – The security code or Card Verification Value (CVV) is the most recent addition to terminal security. E-commerce merchants started requesting this information within the past 5 years, and more recently, it has spread to retail terminals. It is only requested in cases where the card is not present, such as mail orders, phone orders, or Internet orders. The CVV is a 3-digit number printed on the right end of signature strips on Visa, MasterCard, and Discover cards. American Express uses a four digit number printed on the front. The theory is that a bad guy shopping with a stolen card number will not have access to the CVV, since these numbers can’t be printed on receipts, monthly statements, etc. Requiring your customer to have the physical credit card in-hand to place an order with your store reduces your risk of fraud and helps protect you against costly chargebacks.

As time passes, credit card processors and card issuing banks will continue to introduce new features to combat fraud. Their goal is to protect everyone involved in processing credit cards, including you, the business owner. Using these features protects your business and lowers your overall costs. If your current processor isn’t doing enough to protect your business, please give me a call. I’d be happy to talk to you.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

With the abundance of stolen credit card data, it had to happen sooner or later… The thugs who purchase these numbers grew tired of only being able to use them online. They perfected a trick that allows them to use stolen CC numbers in respectable brick-and-mortar retail businesses. They only needed a source for stolen plastic credit cards and a magnetic strip writer. Now, they “reprogram” stolen cards by loading stolen CC data onto the magnetic strips on back, and Voila!, authentic-looking credit cards with no monthly payments required!

Now, many credit card processors program terminals to identify these cards before the bad guys can leave with your stuff. It’s simply a matter of comparing the account numbers on the front of the card to the information read from the magnetic strip on back. For every transaction, your terminal should prompt you to enter the last 4 digits from the face of the credit card. The terminal then compares that to the numbers it scanned from the back. If there’s no match, there’s trouble!

Like most security features, this requires merchants to spend a few seconds keying in information. When this feature first appeared, some of my merchants resisted because they “knew most of their customers” or because their businesses “don’t attract that kind of customer.” Several times, at the merchant’s request, I even disabled that feature. But since then, I’ve suggested that all merchants leave the extra layer of protection in place. In short, you don’t have to own a pool hall or a tattoo parlor to be subject to stolen cards. And if you can protect yourself by entering four numbers, I say “Just do it!”

If your CC processor uses this feature to help protect your business, you can breathe a little easier. Make sure your employees understand why it’s important. But if your processor doesn’t think this protection is necessary for your business, or if your terminal doesn’t offer this feature, please call me. I’ll be happy to examine your current practices and make suggestions how you can better safeguard your business.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

I have a client who sells boats online- lots and lots of boats. He has drop-shipping arrangements with all his suppliers, so he maintains almost no inventory. Typically, his customers must wait at least 6 weeks for their boat AFTER they’ve paid for it. In fact, most of the boats he sells haven’t even been built at the time he sells them. Yet his chargeback rate is extremely low. How does he do it?

Generally speaking, credit card processors discourage merchants from billing customers before the merchandise has been delivered, or at least shipped. The reason is simple: Customers don’t like to see charges on their credit card statements for items they haven’t received. That leads to chargebacks and a high rate of chargeback losses.

So how does this client of mine manage to keep his chargebacks so low? And why does he win nearly every chargeback that is filed? He makes sure his customers understand his prepayment policy, and he has them agree to it in writing. He also goes to great lengths to stay in touch with his customers while they’re waiting. He calls to update them while their boats are in the factory, and he calls them again before shipping. Customers who have been informed of likely delays don’t get mad when delays occur. And happy customers don’t file chargebacks.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!