With having a merchant account, comes great responsibilities. Rules and regulations established by the credit card industry can be stringent and failure to comply can lead to account termination. The credit card industry maintains a list of merchants who have been terminated in the past, and if you land on this list then you will find it is extremely difficult to get a new merchant account.
Here are a few of the main responsibilities you have as a merchant:
Preventing Credit Card Fraud
Your primary responsibility as a merchant is to accept credit only from the person to whom it was issued. This is much easier to accomplish in the retail business where the cards are swiped and you have evidence of signatures to compare. However, when you accept an online credit card payment, ensuring the identity of the buyer becomes more difficult. This is one reason why internet purchases have the highest rate of credit card fraud. Moreover, credit card fraud criminals intentionally target new merchants because generally, they are comparatively inexperienced. The offenders believe that due to inexperience, a merchant would already have dispatched the order before discovering that a crime has been committed.
Let’s take a look at several steps that you can take to ensure that you don’t become the victim of credit card fraud:
- As soon as you set up your merchant account, call your bank and discuss the kind of risks you might be exposed to and the best way to deal with them.
- Understand the characteristics of a fraudulent transaction:
- Orders for your highest-priced product in bulk
- Order might be from outside of your country and may be from countries that statistically have the highest rate of credit card crime.
- The email account is usually untraceable.
- Orders are placed with a request for quick or instant overnight delivery.
- Shipping address might be different from the billing address.
- The billing address might by suspicious. You can now use a map service to ensure that address provided is valid.
- Delivery instructions might be to leave the order at the door. Make sure that you employ delivery services that require the signature of the receiver.
All of these characteristics can also be of true of valid transactions so make sure that you are sure before accusing the customer of criminal activity. In such a situation, you can ask for assistance from your bank as they can advise you on how to confirm the transactions.
Chargeback
This occurs when the holder of the credit card disputes the transaction with the card issuer. In this case, the account of the customer is credited, and yours is debited. In such a situation, you will have to prove that the product or service was delivered to the customer. If there is even the slightest doubt, the customer will get the benefit of the doubt—not you, the merchant. Chargeback may occur due to following reasons:
- The ordered product or service was not received by the customer. In order to ensure that this does not happen, you need to have a delivery confirmation system in place.
- The customer might think that the service or product was not delivered.
- The customer can also forget that he made the purchase. To avoid this situation you need to ask your merchant bank to identify your company’s name on the credit card statement of your customers as well as in the delivery confirmation system.
These are just some of the many responsibilities that rest on your shoulders as a merchant. Act conscientiously by carefully going through all the rules and regulations in order to avoid any unpleasant circumstances. Your bank and a reliable online payment company should be able to help answer many of your questions and give solutions to your concerns.
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