We are often asked to suggest processing solutions for mobile merchants. Recently more and more of those conversations are focused on payment applications for the iPhone. Much of the buzz can be attributed to VeriFone’s recently launched PAYware Mobile iPhone application; the first payment app with a card reader available for the iPhone clearly distinguishes it from all others.

In our experience, we have found accepting card payments on a smart phone to work best in a sales environment where a single user will operate the device, one customer at a time. And the PAYware Mobile solution has received positive client feedback from our early adopters. The thing about early adopters is that they want the latest technology regardless. But for others, they want to analyze their options.

Before there were smart phones and apps, there was a payment service known as Touch Tone Capture (TTC). For many mobile merchants Touch Tone Capture remains a viable option. So let’s compare, touch tone vs. the iPhone.

Touch Tone Capture (also known as Dial Pay) offers a simple card processing solution for mobile merchants. Using any touch tone telephone, you speed-dial an 800 number that connects you to an interactive voice response system where you use your telephone’s keypad to enter the card number, expiration date and the dollar amount to request an authorization code. TTC service is a full featured system and supports AVS, return, force, authorization only, and void functions. Merchants use a manual imprinter to make an imprint of the cardholder's card and obtain the cardholder’s signature.

With the PAYware Mobile app for the iPhone, merchants swipe their customer’s card through a secure card reader and enter the dollar amount. Upon approval, the customer will sign the iPhone screen and can opt for a copy of the receipt to be emailed to them.

VeriFone's encrypted card reader plugs into the iPhone dock connector and cradles the phone. PAYware Mobile uses VeriShield Protect to encrypt card data during the card swipe process, so no sensitive data ever reaches the iPhone payment app. This eliminates hand keying card numbers, speeds transaction times and reduces errors. The signature capture feature securely archives customer receipts should they need to be retrieved in a dispute for greater chargeback protection. In addition, merchants can qualify for lower swiped card Interchange rates.

Break-Even Fee Analysis

Entering the 800 TTC phone number into your speed dial is free.  By comparison, PAYware Mobile has a $49 set up fee.

With PAYware Mobile you will need to purchase a card reader.  Currently this will run you about $119 plus shipping.  A new manual imprinter, merchant plate and 200 sales drafts cost about $35, but you will need more slips over time.

PAYware Mobile costs $15/mo. and $0.17 per transaction, but with the card reader you are able to qualify for swiped card Interchange. TTC costs $0/mo. and $0.30 per transaction, yet your transactions will qualify at the higher key entered Interchange. For our example, we are going to round the Interchange difference between swiped and keyed transactions to 40 basis points.

Here are three calculations base on different average tickets.

This sample analysis assumes all transactions are swiped. The analysis will change if you will use your iPhone to process phone orders, invoices or accept unreadable card transactions where the mag-stripe is damaged.

As you can see, merchants should examine their monthly sales volume when deciding to implement a swiped card solution and analyze the impact from lower Interchange rates. If you are a seasonal merchant, fluctuating between months of peak sales then months of no sales, the no monthly fee of TTC can be appealing. However, consider the benefits of faster transaction times during your peak times, especially if you might lose sales if you are unable to get a line of customers processed.

Protecting against disputes and chargebacks

Merchants should understand that card transactions are a convenient form of payment, not a guaranteed form of payment. Three things are required to help protect merchants from card holder disputes and card issuer chargebacks.

• Proof that the card was present. This can be accomplished by swiping the card and transmitting the swiped card data with the sale. Another way to prove the card was physically present is by making a manual imprint of the raised information on the card itself.
• Obtain an electronic approval code.
• Obtain a signature of the cardholder on a sales draft (certain transactions do not require signatures) and if no refunds are allowed, “All Sales Final” must be printed on the receipt near the signature line.

Merchants must retain this documentation and if requested must be able to provide this proof within a limited time frame.

Using TTC and obtaining manual imprints of all credit and debit card sales and safely storing imprinted sales drafts for easy retrieval is obviously not as convenient as the PAYware Mobile app where the signature capture service remotely archives the customer receipt for electronic retrieval anytime it is needed. Note: signing the screen to capture the signature does you no good without the card swipe or getting an imprint of the card. Consider this value as part of your equation when buying a card reader for your iPhone.

Conclusion

When selecting a mobile processing solution, in addition to the cost, merchants should consider their sales volume, chargeback risk, card data security and operational efficiency.

If your sales volume is low, you know your customers and you are not concerned about chargebacks, setting up Touch Tone Capture service is certainly still a good option to avoid monthly gateway fees. The PAYware Mobile iPhone app is recommended for mobile merchants where the savings from qualifying at swiped card Interchange rates offsets the monthly fees. Furthermore, it is easy to justify the cost of VeriFone’s card reader when you consider the speed, security and convenience of swiping cards for greater chargeback protection with signature capture and electronic receipt storage.

Starting this month, Apple Retail Stores in the United States and the Apple Store online will begin selling the PAYware Mobile reader. Other iPhone retailers are likely to follow. However, please use caution. Remember, you will still need a merchant account to make the iPhone payment app and card reader work. Don’t forget to shop around and read the fine print before choosing your payment processing partner. If you don’t, you may find yourself in a three-year contract with expensive early termination fees, non-qualified surcharges and an impressive fee schedule including monthly minimum billing.

Vantage can establish merchant services for your business with a variety of wireless devices and solutions including PAYware Mobile and Touch Tone Capture. See http://vantagecard.com/solutions/wireless for a complete discussion on wireless options. For an instant merchant Interchange rate quote, use the Merchant Rates quote calculator.

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Which is better for Mobile merchants? Touch Tone vs. iPhone

Merchants should be aware of the pending payment industry deadline of July 1, 2010 related to the Payment Application Data Security Standards (PA-DSS).

Effective July 1, 2010, acquirers must ensure that merchants only use PA-DSS compliant applications.

What does this mean to merchants?  If you are using old payment devices or software, you may need to upgrade.  Merchants using point of sale register systems should inquire with their point of sale vendor about their compliance status if they have not already done so. Merchants should also review the information posted on the PCI Security Standards Council website at https://www.pcisecuritystandards.org/security_standards/vpa/ or on the Visa website at http://usa.visa.com/merchants/risk_management/cisp.html?ep=v_sym_cisp.

PA-DSS is part of the overall Payment Card Industry Data Security Standard (PCI DSS) to protect account data in payment transactions. Unfortunately, there are no single-step solutions for PCI DSS compliance as security standards continually evolve based on industry feedback, real world security incidences and new emerging payment technologies like unattended payment terminals and EMV chips.

The last revision of the data security standard was in October 2008.  According to Bruce Rutherford, chairman of the PCI Security Standards Council, a new iteration of the DSS is coming this year.

• Late April: New PIN transaction security (PTS) standard released (formerly PIN Entry Device (PED) Standard).
• October 2010: Next iteration of both PCI DSS and PA DSS released to public.

While many merchants are not deemed high risk, all merchants should follow best practices to comply with securing cardholder data. Remember; if you don’t need it, don’t store it.

Please visit http://www.vantagecard.com/resources/PCI_Data_Security.html for additional information on PCI and compliance.

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Payment security compliance deadlines and revisions announced

MerchantRates.com, where ALL merchants large and small can get an Interchange rate price structure to lower their costs, has been redesigned with a new look for 2010.

MerchantRates.com has also added new content. In addition to providing an instant, detailed merchant interchange rate quote calculator and guide, MerchantRates.com has created a Frequently Asked Questions resource, covering topics including:

• Merchant Interchange Q&A
• Merchant Rates Quote Q&A
• Payment Technology Q&A
• General Merchant Account Q&A
• Card Payment Rules Q&A

Vantage Points Rewards, a client loyalty rewards and corporate giving program where a portion of the value of each award is donated to the Food Bank, has also been redesigned.

If you are not earning rewards processing your card payments with your current merchant services provider, we invite you to consider our Vantage Points Rewards program. Vantage clients earn one point for every transaction they process or one point per $50 in sales, whichever is greater. Use your points to shop at nearly 200 name brand reward partners already in the program. Please visit http://VantagePointsRewards.com for more information on this unique and exciting offer or to join us as either a Reward partner or Business partner.

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New Merchant Services to lower costs and earn rewards

Paper checks don’t remain as paper very long. In today’s digital age, they are quickly imaged so they can be electronically cleared and settled.

Converting paper to digital images became law in 2003 with the passage of the Check Clearing for the 21^st Century Act (Check21) and the initial implementation meant large companies and banks didn’t have to ship paper all around the country.

Today, more and more of the paper check imaging is being done by merchants and businesses that accept them. Community banks led the way in deploying remote-deposit check scanners as a way to offset the competitive advantage mega banks had with their branch network. By scanning and electronically depositing check images, community banks were able to attract business customers and businesses could choose a bank not just for the convenience of the physical branch to make paper check deposits.

Some businesses image checks one at a time at the point of sale while others use industrial check scanners that can image hundreds of checks a minute in the back office. Check imaging is now incorporated into ATM deposit functions and there are even apps available using your smart phone’s camera to snap a photo and deposit a check.

We’ve come a long way in seven years. But a big question remains. Why do we even have to write a “paper” check in the first place, why not just start with the image?

Is the industry ready for next evolution in check technology?

The inventor of the paperless check, Global Standard Financial, Inc, (GSF) thinks so. Clark Gilder, CEO of GSF points to a Fed policy paper published in November 2009 titled Digital Checks as Electronic Payment Orders (EPO) that agrees with him.

The Fed writes that “a digital check EPO could leverage the existing electronic check infrastructure and provide a convenient, low-cost payment option for both consumers and businesses, based on a payment method that they have found useful for many years.”

GSF announced that they had been awarded two US patents covering the fundamental processes necessary to securely create a paperless check (GSF describes these pure electronic payments as Digitally Originated Checks™ or "DOCs") ahead of the big banking show (http://www.bai.org/) this week.  To see the GSF patent, go to http://bit.ly/DOC_Patent.

As an alternative payment, keeping all the benefits of writing a check yet eliminating the need to start with a piece of paper has enormous implications for business models from peer-to-peer payments and gift giving to B2B invoices and payments to government and merchants.  And accepting paperless checks would costs much less than accepting a debit card today, something businesses and merchants should be enthusiastic about. In fact, instead of pushing Interchange legislation, they should push Congress to adopt revisions to the Check 21 law to secure paperless checks legal standing.

Of course, the security demands of both banks and check writers are a key consideration in any new payment method.  While the volume of paper checks is starting to decline, the growth in paper check fraud continues. Forgers can easily alter the dollar amount of a paper check and simple signatures are the standard authentication mechanism. Clearly sophisticated fraud technologies, electronic signatures and encryption can greatly enhance security. GSF employees these as well as providing additional security using digital rights management features and unique per check identification codes. In terms of security, these enhanced measures make paperless check fraud much more complex to perpetrate.

Over the years, the Federal Reserve has gone about the business of eliminating expensive paper processing after the check was written. Now it is the time to extend the benefits of digital checks all the way to the check writer. With the Fed and ECCHO (the check clearing trade association) endorsing the paperless check concept and the know how and technology available, its just a matter of time before we will all be carrying a check book again, except this time it will be digital and on our smart phone.

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From Imaged to Paperless Checks

House Financial Services Committee Chairman Barney Frank announced his committee would not take up Interchange legislation this year.   However there are steps that small businesses, family-owned restaurants, local retailers and service providers can take to help themselves without waiting on the government.

Immediately switch to an Interchange pass-through pricing plan.  For example, effective October 2010, Visa will extend Small Ticket Interchange to most merchants.  This is an effective reduction in the overall Interchange costs for most merchants.  However, few merchants will benefit since there is no difference between a transaction over or under $15 in their current merchant account contract.  In fact this is just one example.  Most merchants are not getting the benefit of all the incentives Interchange rates available including credit voucher Interchange.  Bundled, blended, “rate as low as” pricing structures, where merchants pay non-qualified surcharges, are unable to realize lower costs on transactions that meet the specified criteria for certain Interchange categories.

Conduct a Google search using keywords "merchant Interchange rate quote" or visit http://merchantrates.com to get an instant quote.  Also consider the tips on how to lower your real rate to accept card payments at http://myrealrate.com/lower-my-real-rate.aspx and while you are there benchmark your card acceptance costs with other businesses of your same size and in your same industry.  A little study will go a long way.

As far as Interchange legislation is concerned, I expect it will continue to be big business for lobbyist on both sides of the issue.  I however am concerned about government intervention. I have zero confidence that the politicians can come up with a better solution than the market.  Because there is money to be made, there are lots of innovative companies developing new payment technologies and more secure systems that are attracting venture capital within the payments space.  Now is not the time to overly regulate as this tends to benefit the incumbents and stifle innovation.  I am also skeptical that the small businesses will out negotiate huge national chains or community banks will out negotiate to big to fail banks when the lobbyist and politicians get together in the back room.

In November 2009, the US Government Accountability Office report indicated that new government imposed regulations on payment card Interchange fees would be difficult to implement, with any benefits hard to measure.   Merchants may be better off championing alternative payment solutions than risk the dangers of unintended consequences asking the government to get involved.

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No Interchange reform legislation in 2010

In an article on Digital Transactions “Could Visa’s New No-Signature Rule Hurt Contactless Payments?” it was argued that Visa’s expansion of its policy to no longer require signatures for transactions less than $25 for most U.S. merchants would undermine contactless payments.

In our blog post Visa Changes Debit Debate, Backs Contactless, we suggested that extending Visa's No Signature Required (NSR) program (on transactions <$25) to most merchants (along with converging signature and PIN debit rates and expanding small ticket Interchange on transactions <$15) were policies that supported contactless payments.

Changing ingrained behavior takes time and doing it in steps makes sense.  Step one, training merchants and cardholders that neither a signature nor PIN are needed to authenticate a transaction.  And we agree with Visa who states “the No Signature Program is often an initial first step, while an upgrade to contactless acceptance offers merchants the ability to accept a new generation of chip-enabled payment products…that also offer speed and convenience at the POS.”

As consumers become accustom to faster transaction times, they will come to expect a different experience at the POS.  Ultimately I believe that consumer demand will drive merchant adoption of contactless payments.  And innovation will accelerate as consumers continue the rapid adoption of smart phones and social networking combined with continued investments in contactless and NFC technology in both payment and identity management.  Finally contactless will be needed in the U.S. to advance security and global interoperability issues.  These important issues will continue to drive policy.

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Strategy to Advance Contactless

Visa changes the signature vs. PIN debit debate with policies to support contactless payments. 

In an interview in the June/July 2009 issue of Cards&Payments magazine, Ellen Richey, global head of enterprise risk for Visa, discussed the adoption of chip technology to make purchases more secure. Richey said “the U.S is not going to be adopting a chip-and-PIN credit card or debit card any time in the very near future” suggesting that in the U.S., the deployment of a contactless-chip card network may not include a PIN component.

In October 2009, Best Buy announced that it would discontinue it’s acceptance of Visa contactless payment cards. Why?  Best Buy reportedly took issue that Visa contactless lacked the option of PIN acceptance, while payment industry analyst pointed to the controversy of Visa allegedly pushing signature-based transactions over PIN transactions in an effort to generate higher Interchange fees.

In an interesting twist, Visa announced that signature debit and Interlink PIN debit rates will both change starting April 2010 – they will be priced the same.  Additionally, Visa is set to expand its small ticket Interchange (on transactions <$15) as well as extend its No Signature Required (NSR) program (on transactions <$25) to most merchants. 

This certainly is an effective strategy for changing the debate on steering purchases to and from signature debit or PIN debit.  And if Visa’s strategy to deal with security and global interoperability issues is for the U.S. to adopt contactless-chip technology, then eliminating price differences between signature and PIN debit will also alleviate the need for contactless to have a PIN option (Best Buy’s concern).

Many were already predicting 2010 to be a breakout year for contactless payments (from contactless stickers to NFC enabled phones).  With these Visa developments, merchants may want to consider adding contactless card readers over PIN pads at their point of sale.

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Visa Changes Debit Debate, Backs Contactless

Visa has announced additional changes for April 2010.  Visa will adjust the following U.S. Visa Debit Interchange reimbursement fees.  The significance here is that for many merchants the underlying Interchange costs for accepting a Visa signature debit (check card) will be the same as accepting a PIN debit transaction. 

Visa Signature Debit

Fee Program
Current Fee
April 2010 Fee

CPS Retail Debit
1.03% + $0.15
 0.95% + $0.20

CPS Supermarket Debit
1.03% + $0.15 ($0.35 max)
0.95% + $0.20 ($0.35 max)

CPS Service Station Debit
0.70% + $0.17 ($0.95 max)
0.75% + $0.17 ($0.95 max)

CPS Automated Fuel Dispenser Debit
0.70% + $0.17 ($0.95 max)
0.75% + $0.17 ($0.95 max)

Interlink PIN Debit

Visa has announced changes in the pricing for Interlink debit transactions.

Fee Program
Current Fee
April 2010 Fee

Interlink Standard— IV
0.75% + $0.17
 0.95% + $0.20

Interlink Supermarket—Performance Threshold IV
$0.25
0.95% + $0.20 ($0.35 max)

Interlink Standard—Fuel
0.70% + $0.17 ($0.95 max)
0.75% + $0.17 ($0.95 max)

Interlink Quasi Cash
1.80% + $0.10
2.30% + $0.10

If there are no price incentives for merchants to accept PIN (and staring in July 2010 "No Signature Required” <$25 for most). what will they do?  Will merchants continue to invest in PIN pads, encryption upgrades, maintenance, etc.?  Will merchants continue to ask their customers… “credit” or “debit” at the points of sale?  

What do you think?

For more Interchange announcements visit http://www.vantagecard.com/price/interchange05.html.

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Visa's Debit Rates Converge

Visa has announced additions to the CPS/Small Ticket Interchange Program, currently available to Local Commuter Transport, Taxicabs and Limousine, Restaurants, Fast Food Restaurants, Parking Lots and Garages, Motion Picture Theaters, Video Rental Stores, Bus Lines, Tolls and Bridge Fees, News Dealers, Laundries, Dry Cleaners, Quick Copy, Car Wash and Service Stations.

Effective October 2010, Small Ticket Interchange will be extended to most merchant category codes (MCCs).  Current Small Ticket Interchange applies to transactions less than $15.  The current Visa Small Ticket Credit Interchange is 1.65% + $0.04 and the Visa Small Ticket Debit Interchange is 1.55% + $0.04.

This is an effective reduction in the overall Interchange costs for most merchant categories.  However, few merchants will benefit since there is no difference between a transaction over or under $15 in their current merchant account contract.  Bundled, blended, “rate as low as” pricing structures, where merchants pay non-qualified surcharges, will be unable to realize lower costs on transactions that meet this revised Visa Interchange category.  Instead, their merchant services provider will retain these incentives. 

See the list of merchants that are not eligible at http://www.vantagecard.com/price/interchange05.html, where you can also view the most recent Interchange announcements and the past 5-year history of Interchange changes.  For all merchants who are eligible, it is highly recommended that they shop service providers and switch to an Interchange pricing plan prior to October 2009.  For an instant merchant Interchange rate quote visit MerchantRates.com. 

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Visa extends Small Ticket Interchange to more Merchants

Buyers need not only an understanding of the benefits and value of what you are selling, they also need clearly stated billing, return, shipping and other policies important in their decision making process. This guide will focus on the essentials of a card payment refund policy:

• Setting a Return Policy
• Refund Best Practices
• Handling Refund related Chargebacks
• Beware of Refund Scams
• Lower costs with Credit Voucher Interchange

Setting a Return Policy

A good return policy can help close sales. Your return policy or lack thereof can justify higher or lower cost as reflected by higher or lower risk of buying from you in the mind of your customer. Your return policy can even define your brand - think Nordstrom.

Handling refund requests in a way that makes good business sense and achieves 100% customer satisfaction is the goal. Consider your options. Will you offer a full refund, in-store credit, exchange only, or are all sales final? The complexity of your return policies will vary depending on your business.

Consider what you sell and who your customers are when establishing a return policy. Begin by reflecting on the value of the goods or services you are selling. Will you require the original sales receipt? Are there any time or condition requirements for acceptable returns? Who pays return shipping? Put yourself in the customer’s position and test your policy by getting feedback from friends and family. How would you feel about doing business under these conditions? Will your policy seem fair and make sense to your customer?

A store credit towards a future purchase is common and seen as an acceptable policy to many buyers. An alternative use of gift cards is to issue them for awarding in store credits. Gift cards can be a great way to retain revenues and provide customer convenience.

Refund Best Practices

Once you have developed your return policies, do not bury them deep within your web site or in the fine print. Be open and up front. Accepting card payments is a convenience form of payment, not a guaranteed form of payment. All the rules and regulations are written in favor of the cardholders. Therefore, it’s very important to protect your interest with these best practices:

• The most important thing you can do is to document that the cardholder was aware of and agreed to your return policy. Specifically, the cardholder's signature must appear on the sales receipt near the cardholder’s signature line. This is especially important if your policy is “All Sales Final”. Make sure that this phrase is clearly disclosed on the sales receipt near the customer signature line. The cardholder's signature should also be obtained next to your refund policy disclosure printed on any related document, such as a contract, invoice or customer agreement.
• Merchants may post their return policy at the point of sale visible to customers, on their web site, in a catalog or verbally on the phone; however, evidence of proper disclosure requires the cardholder signature.
• The best practice for online transactions is to include your refund policy automatically as part of the check-out process. Use a “click to agree” button or have your customer type their initials next to your refund policy disclosure before completing the transaction indicating that they agree to your policies.
• If a return is as allowed by your company's return policy, make sure your managers are trained to issue a credit to the same card account that was used for the original transaction. A best practice is to staple a copy of the original sales receipt to the refund receipt highlighting the matching last 4 digits of each card number for your records. Do not refund cash when a credit card was used. Without an offsetting credit, the card issuing bank has no evidence of a refund and may still pursue to have a chargeback reverse the sale. In this case, you run the risk of having two refunds processed.
• If the item's value is particularly high, the best practice is to request that the buyer return the item to you first, according to your refund or exchange policy. A best practice recommendation is to require that your customers obtain a return merchandise authorization (RMA) number that you supply before they send the item back to you. Additional requirements help to prevent frivolous returns.
• If a refund is mistakenly issued to the wrong card, it is best to VOID the transaction. If the error has already become a settled transaction then contact your merchant services provider and request that the credit be reversed. Do not attempt to offset the credit by running a sale.
• Be cautious with gift returns. In cases where a gift recipient has returned a gift, the best policy is to offer an in-store credit or exchange. Do not return cash. Retain your documentation in case the cardholder claims a credit was not issued to his or her account for the gift.
• If a customer is requesting a refund but you are unclear if you’ve been paid for a card sale, contact your merchant services provider. Once you have confirmed that you have not been paid for the sale transaction, the best practice is to instruct the cardholder to contact his issuing bank.

Handling refund related chargebacks

Because card payments are subject to chargebacks, refund requests that go unaddressed, or are not handled in a way that is satisfactory to your customers, can lead to chargeback disputes. A chargeback means that the amount of the original card sale that was deposited into your business checking account is taken back out. In disputes, payment card issuers will look to see how clearly your policies are stated to the cardholder. Is it reasonable to expect that they purchased with full knowledge of your return policy? And the key to this is the signature evidence next to your refund policy disclosure.

Note that if you maintain a policy such as “No Refunds” or “All Sales Final” the product or service is still expected to work as advertised and be what was ordered; otherwise, merchants still face "Not as Described" chargebacks. "Not as Described" chargebacks are most common due to defective merchandise or service disputes.

Quick Reference Helpful Hints:

• Make customers aware of return policies and procedures.
• If a customer disputes a transaction for this reason, they must first attempt to resolve with you. Always keep full detail and accurate records.
• Insure package delivery for breakage.

“Credit not processed” chargebacks occur when the cardholder alerts their issuing bank that they have requested and are due a refund which has not been credited. In some instances, a merchant issues a credit voucher yet it has not appeared on the customer's online or card statement.

Quick Reference Helpful Hints:

• Always put the return policy near the signature line of the sale receipt (signage at the point of sale is not enough to meet the rules and regulations of the card association).
• Never give card payment credits in cash or check.
• Never give credits on items if you are unsure if the sale was made from your merchant account or if it has been paid to you. Customers presenting their credit card statements or print outs from their bank are not presenting sufficient evidence, and in these cases you should instruct your customer to contact their card issuer with a dispute.

If a credit is issued to the cardholder before you receive a chargeback notice, respond to the chargeback with your documentation that a credit has already been granted.

If the chargeback is initiated before you issue a credit (customer contacts their issuing bank before contacting you) then respond with documentation containing signature evidence that the cardholder agreed to your return policy. Also indicate whether or not the cardholder has followed your return procedures or if they have returned or are still in possession of your goods or services rendered. If you agree to the refund in this instant, you should accept the chargeback. Do not issue a credit on top of a chargeback as this will create a duplicate “refund”.

Beware of Refund Scams

Make sure that end-of-day batch reports match the deposit to your bank. If a refund is present within a batch total then make sure there is supporting documentation for the refund. A best practice is at least a monthly audit of all refund transactions – matching original card sales and card numbers to approved refunds and card numbers.

When available on your point of sale device, password-protect the refund function. Only allow managers to perform card holder credits. And beware of employee theft! Elaborate criminal embezzlement schemes from bookkeepers have been uncovered where card refunds are issued to personal or conspirator card accounts, sometimes in place of legitimate authorized customer returns and others on invented entries.

Take notice of debits to your business checking account. Make sure the debits are not a result of unauthorized refunds being processed through your merchant account. If you notice suspicious refunds to credit cards then contact your merchant services provider immediately. With the help of the card issuing fraud department, they may be able to determine if the card being refunded has a pattern of fraudulent refund activity.

Lower cost with Credit Voucher Interchange

One way to lower your bottom line costs of accepting credit and debit card payments is to have the credit voucher Interchange returned when you process cardholder credits. Don’t overlook merchant rate savings from cardholder returns. Credit Voucher Interchange should be returned to the merchant when credits are processed. In doing so, the original fees billed for processing the card sale are offset by the return of fees back to the merchant when a refund is issued on the card.

Merchants should check their merchant processing statements, calculate their annual cardholder return volume and identify how they are billed for processing cardholder returns. Don’t leave savings from credit voucher Interchange on the table. Merchants should seek a direct Interchange pass through billing from their merchant account provider. However, not all Interchange pass through rate programs are the same and many do not return the credit voucher Interchange. Get a quote now at http://merchantrates.com to see the Visa, MasterCard and Discover card credit voucher Interchange rates.

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The Essential Merchant Guide to Card Payment Refunds