In the past, I managed the Accounts Receivable/Credit and Collections of an electronics firm. There was one area that was always tricky: accepting credit cards. Accepting charges by telephone involves a greater risk of fraud and cardmember/customer disputes. In doing so a great deal of caution should be exercised. Even if you accept those charges infrequently, precise procedures should be in place and followed in order to limit any unnecessary problems. Today with many companies running stores fronts from Web sites, taking credit cards does come into play. When one of my clients complained about the problems he was facing, I decided to offer this as a tips page.

To properly process Visa/Mastercard or American Express Cards or any major credit card, you need to follow precise procedures. Accepting charges over the phone in a "card not present" environment involves a greater risk of fraud and Cardmember disputes. Even if you do so infrequently it should be done cautiously in order to reduce the risk of "Chargebacks". Chargebacks disrupt your business, it takes time to respond and having your account debited makes any business uncomfortable. Although there is no way to totally eliminate Chargebacks there are steps you can take to help lower the chances of it happening.

Ask the Cardmember for:

• Name exactly as it appears on their Card
• Card account number
• Beginning date and expiration date on the Card (valid dates)
• Card Identification number
• Billing address as well as the address where the merchandise is to be shipped (if it is different from the billing address
• Home or business phone number
• Phone number the Cardmember can be reached (if different from the home or business phone)

Be sure to:

• Complete a Charge Form for each transaction including all the information required for an in-person charge
• You need to include ALL items of merchandise or detailing of services and applicable sales taxes
• Write "Telephone Order" or "Mail Order" which ever one applies, on the signature line of the Charge Form

You must take reasonable steps to verify the authorized usage of the Card number. Verification of the authorized Card number requires:

• Cardholder name as it appears on the Card (including any company name)
• The complete account number
• The "valid from" and the expiration date

You must provide the Cardmember with a completed copy of the transaction. For each sale you must fully complete the Sales Slip by filling in the following information:

• The Card member's account number
• The Merchant's name
• Quantity and brief description of the merchandise or service
• Transaction date
• Authorization code
• Employee initials
• Dollar amount of the transaction
• Applicable sales tax
• Total dollar amount
• Card member signature

Telephone order and Mail order sales must be prepared as above, except you must write the words "Telephone Order" or "Mail Order" as applicable on the Sales Slip in lieu of the Cardmember's signature.

If you don't use sales slips I think the use of a Proforma Invoice covers all the information required. Simply FAX the Proforma to them and have them authorize it with a signature and FAX it back.

In case of a conflict, the terms of your Card Acceptance Agreement will prevail. If you do not meet the standards set forth with their procedures for card acceptance, the issuing card company has the right to full recourse for that charge.

Respond to any Inquiry Letters from the issuing card company on time! Each Inquiry Letter has a date by which you must reply. If you need to dispute a Cardmember claim, the issuing card company must receive the support materials that resolve the dispute by that date. If they do not hear from you they will debit the amount in question and once the debit is processed it cannot be reversed.

Ask yourself some simple questions:

• How would you be able to prove that the sale was authorized without a Proforma or authorized signature?
• How could you prove to the issuing card company that the customer did order the goods?
• Or that the prices and freight were accurate and that they had properly been informed?

FYI, the proper Cardmember signature is the only accepted proof of delivery!

Take a close look at the agreement rules from the issuing card company. Each varies to some degree. I compiled this list from several of them. I no longer work in this field but do know you should be paying attention to what each companies rules are and follow them! No one wants to give product away for free or to go through a Chargeback. Use good common sense, if something does not feel right about the sale - don't proceed. If you don't feel comfortable that you have the proper information don't feel pressured to close the transaction too soon. Just remember to err on the side of caution!

There is another option however, outsourcing to a third party billing service. Those types of services install a credit-card billing system on your Web site so that you can accept all types of credit cards and online checks. You would be given the ability to co-manage your customer database but you are not allowed access to the customers's credit card numbers. An obvious advantage is that you, the Web site owner would not have to own a merchant account which would eliminate account limits or chargebacks. Basic charges for these services runs between 10 to 15 percent of the transaction amounts. Many ISP's now offer this service as an option along with standard Web hosting and SSL.

Meta Tags | About | Favicon.ico | Cool Links | Web Facts | Home

A-1 HTML I've left my e-mail off on purpose, the site is for information but no services are offered at this time.