Accepting credit cards is a must for most businesses. But in exchange for the convenience of plastic, you have to deal with a few pitfalls. Want to protect your business and safeguard your cash flow? Then take steps to avoid these common problems.
Skimming and Shimming
Mainly aimed at cards with magnetic strips, skimming involves inserting a small device into a card reader to steal the information from the card. If you run a petrol station where customers pay for their gas with credit cards at the pump, for example, skimming is a risk. To protect your customers, check your card readers daily for skimming devices.
Skimming can also refer to employees running customers’ cards through a personal digital assistant to steal information. To prevent this, screen employees thoroughly before hiring them, or ensure all credit card transactions have at least two witnesses. Shimming, a form of skimming geared toward EMV cards, is a burgeoning threat, but you can protect against it much the same way.
When you store customers’ credit card details, you make it easier for them to make purchases in the future. Saved details also make subscription-based purchases possible, and they help prevent abandoned shopping carts on ecommerce sites. That said, when you store credit card details, you need to ensure they’re safe. If a hacker gets information, that doesn’t reflect well of your company.
To protect your clients and your reputation, avoid storing payment details on paper or in spreadsheets. Instead, get a credit card processor that can store the information for you. Rather than provide card readers for in-person transactions, many credit card processors offer special software you can download onto your computer for recurring transactions. When selecting a processor, make sure the program encrypts the credit card information while it’s being stored or transmitted. Also, make sure only employees you really trust can access these details.
All credit card processors charge a fee for their services. If you decide to accept credit cards and leave all your prices the same, you may suffer a loss in revenue should all your customers start paying with credit cards. Fortunately, that doesn’t tend to happen, because most customers spend more when they can use a card. According to one study, consumers spend 12% to 18% more on credit card transactions than cash transactions.
However, you shouldn’t rely on a boost in sales to cover your fees. To keep fees as low as possible, instead do some comparison shopping, as there are all kinds of credit card processing companies vying for your business. Finally, although you can’t pass the processing charge onto your customers, you can offer discounts for cash payments.
Sometimes customers dispute the validity of a transaction. If their credit card provider agrees with the claim, they may reverse that transaction. That’s a chargeback. Although this practice is meant to protect consumers, it can get expensive for business owners.
To avoid chargebacks, make sure you’re following your credit card processor’s protocol. If your processor requires you to capture a customer’s IP address or security code for online purchases, for instance, make sure you’re getting that information. Save the information, too, as it can be critical if you have to dispute a chargeback.
Also, you may want to spend time familiarizing your staff with signs of fraud. Signs of in-person fraud include signatures not matching and customers taking several tries to enter the right PIN. Signs of online fraud include large orders sent to one address but purchased with multiple credit cards, international shipping, and misspellings of names or addresses.
Moreover, you might want to think about how your return policy affects chargebacks. Usually, chargebacks occur when someone has stolen a card and made a fraudulent purchase, but some customers initiate chargebacks when they feel they’ve gotten a subpar product or service. To avoid this problem, consider a generous return policy for your products or a satisfaction guarantee for your services.
Sometimes, processing credit cards is confusing, as the equipment can have a steep learning curve. When you’re handling chargebacks or disputes, you may encounter codes you don’t understand. To simplify such issues, try using a credit card processor that offers customer support and training.
If you live in a rural area with limited infrastructure, you may sometimes lose your internet connection and be unable to process credit card transactions. That can cost you sales. To avoid this pitfall, make sure you have a couple of ways to process credit card payments. If you usually run payments over the digital subscriber line, you may also want a credit card processor attached to a cell phone. That way, if the DSL is down, you can use the 4G on your phone.
Whether you sell products or services, accepting credit cards makes the purchasing process easier for your customers. But to safeguard your reputation, finances, and customer information, you need to be ready for common pitfalls. In addition to following these tips, think about working closely with your credit card processor, and ask for help whenever you have concerns.