In ideal credit card processing situations, merchants would rest assured that their customers would get their merchandise in good condition and in a timely manner. In addition to that, the merchant would receive their funds in a timely fashion, as well. Unfortunately, the real world doesn’t work that way, and many transactions can become misconstrued, be mismanaged and not go as smoothly as planned.
As in any multi-step procedure, problems can occur along the way. In a credit card processing situation, snags and snafus usually originate with the customers or, less frequently, the merchants. The credit card processing companies, of course, also have a lot to do with how the problems that arise get started, and they are certainly the major player in the “fix-it” phase. It’s all how you do business.
Now, no merchant is ever responsible for the subsequent actions of the customers that they sell goods to, so if the customer happens to be deceitful or fraudulent, there is not much a merchant can do about it except to take legal action after the fact. There are ways to run a credit card processing system to minimize the most common pitfalls, however, and it is the merchant who is completely responsible for doing so.
With a world full of potentially surprising scams and even honest mistakes, the one controllable factor that merchants can manage correctly (and directly) is how they operate their business. The list below enumerates different credit card pitfalls that can ultimately put a merchant’s business in jeopardy:
The unscrupulous and illegal act of capturing card data and then using the data to manufacture counterfeit credit card is called skimming. More often than not, it is a dishonest salesperson or a desperately disgruntled waiter who will resort to it. They can use their own personal digital assistant (PDA) with a card reader to secretly swipe and save credit card data.
- Strong Encryption for Cardholder Data
Keying in credit card information and then storing the data on your PC is easy and convenient. However, it’s a common misconception that this is a good and secure thing to do. Unless you have adequate security, for your “virtual” office as well as your physical one, hackers can give themselves free access to data that belongs to you and/or your customers. This opens the door for potential theft and forgery. Encryption capabilities are built in to many modern operating systems so taking a little time to encrypt the credit card information you store is a simple way to eliminate any risk.
- Unrestricted Access to Computer
Although you have employees working on your systems on a daily basis, it certainly doesn't mean that they need access to your personal files. Putting all your faith and trust into the people that you employ might sound like a normal routine but it’s a hazard for you. At any time, one of them could steal important information, like credit card numbers, etc. Chances are you will find the honest employees you need for these sensitive positions among your longer-term employees who have been there long enough to prove that they are trustworthy.
- Keep Your Records for Only a Short Time
Unfortunately, it’s a requirement for merchants to keep their record for a certain amount of time, sometimes for up to seven years for certain items of interest to the IRS. However, some merchants wisely try to get rid of any records, miscellaneous documentation from previous years and outdated reports that they are not required to keep. Of course, confusing what is required with what is expendable can potentially ruin a business. Be sure that you keep the correct, important receipts for the amount of time required. If the IRS were to request of a business certain documentation or records, perhaps as part of a full-scale audit, you must be prepared for this situation by having everything in complete order.
- Ignoring Credit Card Processing Security Features
The major credit card associations, Visa and MasterCard, will charge you a fee if you choose to ignore the built-in credit card security requirements. For example, the address verification feature and the three-digit security code on every credit card are there for a reason. Pass-through fees apply when it comes to these features, meaning that a fee is added to the discount rate that is in force at that time. If you do choose to ignore these procedural requirements, you risk being assessed a penalty. Continued failure to follow required security procedures can affect the cost and the status of your merchant account.
- Not Resolving Customer Disputes
When customers dispute credit card transactions that appear on their statement, they often request that their credit card companies issue refunds, and that the merchant forward a copy of the receipt for that particular transaction. You can avoid further problems with these issues if you fulfill the customer’s request in a timely fashion. Failing to provide your processor requested documents within a certain amount of time could result in a chargeback. Accumulated chargebacks, of course, can seriously affect your account status and lead to its being closed.
Without stability in credit card processing you have a potential time bomb on your hands. Credit card processing gateways operate 24 hours a day, seven days a week with no vacation leave or holiday break the whole year through. You can always count on their service, anytime, anywhere you may be. Using this option can help you avoid a major setback.
- A Global Reach
With a web-based credit card processing gateway, online shoppers from all over the globe can do business with you regardless of currency conversion rates and geographical boundaries. However, there may be additional risk involved in doing payment card transactions with customers in other countries. Sometimes the problem is antiquated telecommunications equipment in other parts of the world, and sometimes criminals congregate in certain countries to set up web-crime scams. Some of these scams end up being named after the country they are committed in (the “Nigeria scam,” for example) and many use stolen and fraudulent credit, debit and payment cards to order merchandise for delivery. Stay informed about international web-based crime, and research and implement appropriate defensive measures.
In closing, be aware of changing transaction and business environments and stay on top of how to handle the potential pitfalls of credit card processing. No matter how simple and easy going it may seem, there are always going to be a few bumps in the road. It’s how you handle those bumps that will determine the end result of your business enterprise, whether it is a success or a failure. The choice is yours. Make wise decisions, especially in areas that cost you dearly when you don’t. This is one of them.