Credit Card Processing Information that Every Ecommerce Owner Should Know



There’s quite a bit of work involved in setting up an online business. Ecommerce owners can get so wrapped up in website development, marketing, product acquisition, and search engine optimization that they may neglect the process of finding a merchant provider to process their credit card orders. This can lead to significant costs, problems, or delays — and may even sink an online business before it gets started. This brief overview provides important information about credit card processing that’s essential for online businesses.

Credit Card Processing Preparation
It is important for a business owner to have all of the necessary information available before applying for a merchant account. Failure to do so will lead to additional delays in getting the account (and possibly the business itself) up and running. To apply for a credit card processing service, an ecommerce owner must have a live website, a checking account, a copy of a voided check, return policy information, and proof that the business exists (articles of incorporation, business license, etc.). If the business operates in what is considered to be a high-risk industry (such as adult entertainment, travel timeshares, credit counseling, or multi-level marketing), additional materials like a photo of the company’s location, trade references, and copies of recent tax returns might also be needed.

Diversify Merchant Providers for Multiple Websites
Many ecommerce owners operate more than one website. These sites may be hosted by a single company in order to save money. This kind of piggybacking should not be done with a single credit card processor. Remember that the name of the registered website is the one that shows up on the customer’s credit card statement, no matter which website the product or service was purchased from. For example, let’s say an online retailer runs a costume jewelry website that has its own credit card processor, and he or she also wants to use that account for his or her handbag, wristwatch, and quilt websites. The chances are good that customers who order a quilt, purse, or watch may see the name of the jewelry website on their credit card statement and then dispute the charge because they did not remember purchasing any jewelry. Even though they are mistaken, the business owner still gets docked for the chargeback that occurs. And more chargebacks lead to higher discount rates and additional surcharges.

Test drive the Credit Card Processing System
Before an online business begins taking orders from buyers, the ecommerce owner should run a test to make sure that all aspects of the process are working properly. This can be accomplished by authorizing a small charge (around a dollar or so) on a credit card to make sure that the card is properly authenticated and the amount is correctly recorded in the company’s bank account. Only if this process proceeds smoothly should an online website begin accepting credit card payments from actual customers.

Record Verification Numbers
On the back of most major credit cards, there is a three or four digit code. Asking customers for this code can help prevent fraudulent purchases made by stolen credit card numbers. For the ecommerce owner, it means that chargeback rates could drop by as much as 26 percent. Most merchant service providers offer this processing option.

Verify Addresses
This process also helps reduce fraud, since potential criminals who are trying to order products or services with stolen credit card numbers will not enter the real cardholder’s billing address. Using an address verification system can stop a fraudulent order before it gets filled. In fact, credit card processors prefer this extra layer of security, and are likely to give business owners who use an AVS a lower rate or smaller fees.

Be Suspicious of Foreign Orders
Unfortunately, there is no worldwide address verification system in place at this time, meaning that non-U.S. addresses will not be flagged if they are fraudulent. For this reason, ecommerce owners should thoroughly scrutinize orders from other countries — or refuse to accept them altogether. A large number of illegal credit card transactions occur in Russia, Indonesia, and developing nations.

Reduce the Risk of Credit Card Fraud
If any order, foreign or domestic, appears at all suspicious, it is wise for business owners to do the extra legwork and verify its legitimacy. This may mean calling or emailing the customer directly. A follow up should be mandatory if the order is for an unusually large amount.

A simple warning message posted on a website can go a long way in deterring order fraud. This message should mention that all Internet Protocol addresses are being logged. Keeping records of IP addresses can help track down fraudulent orders.

Consider Extra Recordkeeping
There are additional security measures that ecommerce owners can take. They can require a customer signature upon delivery of the product, and these signatures can be kept on file. Also, the business owner can request a faxed copy of both sides of a customer’s credit card and/or driver’s license. This tactic works well with business-to-business customers.

It may not be the most riveting aspect of an online business, but facilitating credit card payments effectively is arguably the most important one. Taking the time to adequately set up a credit card processing system can ensure that ecommerce owners not only have the freedom to focus on growing their online business, but also receive much-needed revenue in order to bring those expansion plans to fruition.