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
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
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
Record Verification Numbers
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.
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
Be Suspicious of Foreign Orders
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
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.
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
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.
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.