 or ("My Money For Credit Card Orders Never Reached My
Bank Account!")
What happens when you process credit cards for approval
and then find out later the money never reached your bank
account? This can be a very frustrating experience and
can be avoided with a little knowledge.
Many business owners don't realize that the credit card
processing company is at considerable risk for credit
card orders that are processed. Imagine this scenario...
A fraudulent business owner (Mr. Crook) applies for a
Merchant Account to accept credit cards and tells the
salesperson that he sells "vitamins" over the phone, through
the mail, or on the internet. The Salesperson is very
happy because it is an easy sale. Mr. Crook takes orders
for about six months and he even sells the vitamins at
his cost. This results in getting a lot of orders. After
six months Mr. Crook "pretends" everyone who placed an
order has re-ordered and keys in thousands of orders into
his software or terminal; but Mr. Crook "forgets" to send
the vitamins. People start calling Mr. Crook but Mr. Crook
just tells them that the vitamins are on back order to
buy some time to process more fake orders.
The credit card processing company deposits all the money
for credit card orders taken in Mr. Crook's bank account
24 to 48 hours after each daily batch of orders. After
Mr. Crook processes a few thousand orders over the next
couple of weeks Mr. Crook empties his checking account
and leaves town; never to be seen again (until he calls
the next eager Merchant Services Sales Representative
with another company...)
So what happens? All the honest customers who paid Mr.
Crook start calling Mr. Crook's company only to find out
the phone number has been disconnected. The next call
most customers will make is to the bank that issued them
the credit card that they used to place the order. The
bank typically tells the customer that if they didn't
get the vitamins then they will get a credit on their
next credit card statement. The Bank then contacts the
credit card processing company that processed the order
to alert the company of a "dispute". The credit card processing
company tries to contact Mr. Crook and gets the same disconnected
phone number! Guess what? The Merchant Account Provider
probably takes the hit and has to reimburse the thousands
of customers who didn't get their vitamins. This can be
devastating to the credit card processing company.
This is just one scenario but the exact same thing can
happen even if Mr. Crook is honest and simply mismanages
his business and declares bankruptcy as example.
These situations and others result in credit card processing
companies always being on the lookout for the next Mr.
Crook. One of the ways they do this is by approving each
Merchant with a monthly estimate of volume and an average
order size or ticket (like a credit line) and assessing
risk factors to the type of business, etc. It's easier
for Mr. Crook to get a Merchant Account with a lower monthly
volume approved and a low average ticket approved but
Mr. Crook will try for the highest monthly volume that
he can get approved and the highest average order size
that he can get approved.
The credit card processing company looks for "spikes"
in processing volume or a series of one or more large
orders that are much higher then the average order size
approved. Large average order size businesses are particularly
scrutinized. When these "spikes" occur the bank of computer
monitors at the Merchant Account Provider alert the "Loss
Prevention" department. Imagine, if you will, the overhead
monitors in the movie "War Games" ;-).
When a suspect transaction (or suspect transactions) occurs
the credit card processing company will typically want
to check it out. They will want to protect themselves
by possibly not sending the money to the business owner's
bank account. Wouldn't you do the same thing if Mr. Crook
was YOUR last experience? They may want to call the customer
to make sure the customer placed a legitimate order. You,
the Merchant, may be looked at as guilty until proven
innocent.
So how do you, the business owner, prevent this from happening?
Make sure you know what the monthly volume and average
order size are that the credit card company has approved
you for and stay within these limits on a prorate daily
basis - particularly at first. Remember, the credit card
processing company looks at this as sort of a credit line.
Do NOT stack up a bunch of orders by accepting credit
cards before you are approved for a Merchant Account and
then key all the orders in the day you go live. This is
exactly what Mr. Crook might do and you are asking for
trouble. DO call the credit card processing company with
large orders that are much higher then your average approved
order size and tell them you would like to process the
larger order. It probably helps if you have a signed invoice.
DO let the credit card processing company know about increases
in business do to your success, the season, or special
promotions, etc. Keep the credit card processing company
informed. Again, this is especially true early in your
Merchant Account relationship.
Make sure you are dealing with a competent Sales Representative
who is properly advising you. That "cheap deal" may become
very expensive later when you find out your account was
incompetently set up. As a final caution, make sure you
are doing business with a financially sound credit card
processing company. Check them out. It's YOUR money that
the credit card processing company has their fingers on.
This is far more important then ordering office supplies
as example from the cheapest source. It doesn't take very
many botched orders or "lost money in the system" to make
you quickly forget that "give away" up front pricing. |
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