Merchant Services: Consumer Credit Card Protection

Merchant Services: Consumer Credit Card Protection

As a business owner or merchant, you always want your customers to be happy. With the use of credit and debit cards at an all-time high, the risk of fraud and financial loss to merchants is increasing. While it may be impossible to prevent every instance of a chargeback or other credit or debit card related issue, there are some methods of protection you can put in place to limit these occurrences.

Credit card theft is a major problem for many consumers. As a merchant, you can be aware of instances when someone might be attempting to make a purchase with a stolen credit card. If a charge goes through with a stolen card, you may be hit with a chargeback, which can include not only having to refund money for a purchase but also penalties and fines from the card issuer, depending on terms set forth in the merchant agreements.

If a customer’s card is declined, it may have been reported as lost or stolen. Customers should be aware that there are legal protections which limit their liability, and as a merchant, a familiarity with these protections may improve customer service and help build return business.

As a merchant, your customer’s legal limit for liability under the Fair Credit Billing Act (FCBA) law is capped at $50. This means that the cardholder cannot be held responsible for any unauthorized charges over this amount. Because credit cards tend to have more fraud associated with them, you as a business operator are typically charged a higher processing fee per transaction than for purchases made with a debit card. Different card issuers such as Visa, Mastercard, and Discover have different “pass through rates,” or a percentage of each purchase that is deducted for allowing customers to use that particular card. Something called a security code located on the back of the credit card adds another layer of security. It is advised that you set up your terminal to take this security code in addition to swiping the card, just so you have an added layer of security for the customer. Many merchants also opt to ask for identification, which is a good way to help prevent card fraud. If you feel uncomfortable taking a card, you can always call the card issuer to verify information if need be.

Continue Reading – Consumer Credit Card Protection, Part 2

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