Merchant Account Blog & Credit Card Processing Blog

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MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Understanding Your Merchant Account Responsibities !!!!

If you are shopping for a new merchant account, you need to understand what you are getting into. Many times business owners are in a rush to set-up credit card processing for their business, they overlook the fact that they are entering into a contract that has many responsibilities and rules to abide by.

Many times merchants will find out the hard way, by being fined or getting their merchant account shut down. In some instances, merchants are “TMF’d” which means they lose their privilege to accept credit cards in the future. It surely make more sense to understand your responsibilities and model your business to conform with the rules set-forth by Visa and Mastercard.

Accepting Credit Cards - A Privilege:

Understand that being accepted to accept credit cards is a privilege, not your right !!!! Should you take this lightly, you could find yourself losing this privilege, permanently. That’s right, permanently !!!! You could personally be banned from ever accepting credit cards, for any business endeavor in the future. 

Unhappy Customers Can Destroy You:

An unhappy customer can create havoc on your business. Credit card holder’s have the right to call their credit card company and dispute a transaction on their credit card. These disputes have the potential of becoming a “Chargeback” to your business. A chargeback is simply a reversal of the charge, from your bank account, back to the customers card. These reversals come with very stiff fines to the business owner and could get your account terminated. Here some key points to avoiding chargebacks.

• Offer A Superior Product Or Service
• Quickly Resolve Customer Service Issues
• 100% Unconditional Return Policy
• Toll Free Customer Support
• Maintain Signatures + Shipping Records

Exceeding Volume Limit’s:

Every merchant account agreement has an “Average Monthly Volume” amount for Visa & Matercard. During your approval process, this amount is underwritten by the processor and is usually based on the credit scores of the merchant. If you are approved for that amount, you must process within the limit.

Should the limit become an issue, you must call in to ask that it be re-evaluated by the underwriting department. If your credit scores are too low, you may not get an increase.

If you simply ignore this limit, at some point your account will be shut-off.

Exceeding Ticket Limit’s:

Every merchant account agreement has an “Average Ticket” amount for Visa & Mastercard. Again, during the approval process, this amount is underwritten based on your credit scores. From an underwriting stand point, the higher the ticket, the higher the risk. If your account is approved for a certain ticket amount, you must process within that limit. Occasional “High Tickets” should be disclosed on the application, prior to underwriting. Contacting your “Risk Department”, prior to running high tickets is advised.

If you simply ignore this limit, your account could be terminated.

Honor All Cards:

Every merchant account agreement has a “Honor All Cards” Claus. This means as a Visa / Mastercard Merchant, you are bound to honor every credit card transaction presented to your business. That tiny sign at your local diner that states, “$10 Credit Card Minimum” is in direct violation of the terms of the merchant account agreement.

You cannot charge a “Surcharge” on credit card transactions either, this would also be in violation of the merchant agreemnet, as well.

Reserve Account:At any time, at the sole discretion of the bank, the bank has the right to place funds on hold in a non-interest barring reserve account. Reserve account is to protect the bank from future losses due to fines, chargebacks, ect that may come through your merchant account. Hold time-frame will be determined by the bank and is usually for long enough time period to cover future customer chargebacks.

In Conclusion:

As you can see, “Your Privilege” to accept Visa & Mastercard comes with many duties and responsibilities. Failure to comply, could prove to be very costly and cause your account to get “Terminated” and potentially lose your credit card processing privilege in future business endeavours. Play it safe, understand the rules and play by them.

If you have any questions, please feel free to give me a call.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Understanding the term “Chargeback” is the first step in preventing them. A “Chargeback” is when a customer calls their credit card company and disputes charge on their statement. This dispute has the potential of turning into a “Chargeback”, which is a forced reversal of the charge from your account back to your customers account. Keep in mind that it comes with penalty fee per occurrance and if you get to many chargebacks within a given month, your account will be closed for “Excessive Charrgebacks” and under Visa / Mastercard Rules, placed on a Terminated Merchant File.

With that said, you can see that “Excessive Chargebacks” can destroy your reputation and the future of your business. So lets analyize the process and how to prevent them. First, when a customer makes the initial dispute, you will receive a “Retrieval Letter” requesting that you provide information on the transaction in question. You have only 7 Days to respond to the “Retrieval Request”. If you do not provided the requested documents within the time-frame, this transaction will become a “Chargeback”.

Now you need to analyize why this happened and take steps to keep this from happening again. Ask yourself, “What Can I Do Differently To Avoid This In The Future”. Below are somethings to consider:

1) Did the customer remember my Business Name and the fact they made the purchase ?

2) Did I ship the product in a Timely Manner from the time I processed the credit card ?

3) Do I have evidence of shipping, such as Signed Receipt from Fed-Ex, UPS, DHL, USPS ?

4) Do I have evidence of a Signed Credit Card Receipt or Manual Imprint of the card ?

5) Is my Customer Service Phone being answered to address potential customer problems ?

6) Do I need to change my “Return Policy” and be more understanding to customer issues ?

7) Am I on the Alert For Credit Card Fruad and using methoods set-forth by Visa / MasterCard ?

The above 7 questions will usually give you the answers to how Chargebacks can be avoided in the future. You must use common sense and make a honest assessment of the situation. Don’t fool yourself and think that this won’t happen again, because if their is a problem somewhere, it will happen again.

Remember that accepting credit cards is a “Privilege not a Right” and if you abuse that privilege, you may not be given a second chance. Stay out of trouble !!!!!!

If you have any questions about Preventing Chargebacks, feel free to give me a call.

MARK SANDS
http://www.usa-merchantaccount.com

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