BluePay is pleased to bring you this valuable information from our partner, Due, makers of a free digital wallet that allows users to easily make and accept payments online.
Credit card processing seems pretty straightforward, right? All you need to do is use the information from a customer’s credit card company to get your payments from the card issuer, using some type of account or equipment where you swipe or key in the data. Then, in a day or so, the money appears in your business bank account.
While it basically works that way, there are a few other things that you will need to know about credit card processing if you plan to use it as a payment acceptance method in your business.
Consider these five tips as you add credit card processing to your business:
1) You are the most vulnerable to fraud, so be proactive and comprehensive with your security methods. Many small business owners are actually not aware of all the inventive ways that fraudsters and hackers have developed to break into payment systems and steal personal and financial data. Therefore, businesses don’t install the appropriate level of security solutions to stop fraudters, leaving them open to breaches and putting customers at risk. Educate yourself about the various ways you can be vulnerable by having a security assessment, reading online information, and working with a payment processing company (like our friends here at BluePay) to understand the risks. Then, determine the best security tools to use like tokenization, CCV, address verification service (AVS), IP address verification, biometrics, EMV and more.
2) You will be liable for not being PCI compliant regardless of whether you thought the payments processing company you hired would handle that or be held accountable, so take every step possible to ensure you are fully compliant with existing and future regulations. It’s easy to assume that the company you hire for processing will foot the bill for any lack of compliance, but it is still on you. If you don’t want to deal with fees, penalties, and even restrictions on credit card processing, you will need to be responsible for ensuring your PCI compliance. Information is available that sets the standards on what you can and cannot do when processing payments. Have the processing company you work with prove that they have ensured your PCI compliance; if they haven’t, start looking for a company that will.
3) You cannot keep customer payment data on any device or cloud storage space, so use a transaction system that does not keep any of this information and train staff to properly handle this data. Storing customer data not only makes you vulnerable to a data breach, but you are also not allowed to do it according to current regulations. All data related to credit card numbers, CCV codes and related personal data must not be stored. It can be used during the transaction only. You can maintain a customer database that has names and contact information for marketing purposes, but that’s it.
4) The more credit cards you process, the lower your processing costs, so consider how you might increase the volume to decrease expenses. Another way you can enjoy a lower rate related to processing credit cards is to process more of them. While it may seem difficult to imagine as a small business, you can actually attract more customers by accepting credit cards so publicize it on your website, social media pages, and marketing materials. Over time, you’ll be able to increase credit card processing volume and be able to go back to your processing partner to negotiate a better rate. This may also be the time to research what other companies offer for various volume levels to see if you can get a better deal.
5) Chargebacks can become very expensive for your small business and are often fraud-related so consider enacting a plan to reduce them. You may think returns and refunds are just part of doing business, and, to a certain extent they are, but they are becoming more problematic with the advent of online shopping and creative criminals. More people are realizing they can end up with free merchandise by claiming they never received the items or they don’t recognize the charge on their statement. Banks, issuing card companies, and processing firms will often side with customers after doing an extensive investigation because these are so difficult to prove or disprove. More than just annoying, chargebacks mean you have to pay fees and penalties plus lose the revenue and merchandise associated with them. Be proactive in stopping chargebacks in their tracks by including contact information on a charge account statement, clearly spelling out your return policies, being responsive to customers, offering online tracking, and not charging cards until the merchandise ships.
These tips are not meant to scare or discourage you from adding credit cards to your payment methods. The more you know about credit card processing, the more time and money you will save yourself, and maintain a credible reputation with all stakeholders, lower your risk of fraud or chargebacks, and focus on expanding your customer base related.