Merchant Account Risk

Posts Tagged ‘Merchant Account Risk’

Tuesday, September 23rd, 2008

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Understanding your merchant account and the risk associated with it are very important, when it comes to avoiding disaster. Merchant account risk can vary from business type to business type. Lets look at a “Retail” business first. A customer comes in your store and purchases $300 worth of merchandise. You run the credit card and customer signs receipt. In this senario the purchase was made with a stolen credit card. Thirty days from now, the true card holder receives their statement and disputes the charge. Guess who is responsible for that charge…the merchant. The merchant has received stolen money and the charge will be reversed. This is just one risk associated with a merchant account.

Another senerio for “Ecommerce”, you receive an order huge order for 10,000 Widgets and run down to your post office to ship it. Three weeks from now the customers call his credit card company and says, “I did not receive the order”. You have not proof that you mail it or he received it, becuase you used the post office. This charge will be reversed at your expense.

You need to be aware of the risks and try to avoid problems. A sound plan for avoiding chargebacks should be put in place and you should always be aware of potenial problems. We put together a pdf about avoiding the pitfalls of a chargeback, take a look.

If you have any questions about merchant account risk or avoiding chargebacks, please give me a call.