Ideal Cost Reacts: Part 5 – Business 2 Community’s “25 Mistakes Businesses Make When Starting to Accept Credit Cards”
We chose to review this comprehensive article because it lays out what merchants should realize when dealing with credit card processors as well as what action steps they might individually take to optimize the payments process. The author relies on many third-party sources for its claims. Since the piece is quite comprehensive, we’re going to break it down in a 5-part series with a final verdict at the end. Let’s see if this guide helps small businesses make better decisions.
20. Not handling customer service issues in a timely manner.
This is just a part of Business 101. If you want to deliver a great customer experience, which will make them become repeat customers, then you need to go above and beyond when it comes to customer service.
For instance, if a customer has a question regarding a transaction and you respond ASAP, you’re not only delivering excellent customer service, you may even prevent a chargeback before it happens.
Correct. Many chargebacks are avoidable and stem from consumers giving up to reason with the merchant. It is always important to answer phone calls and emails promptly. Along with having a clear return policy, merchants may use common sense if they want to reach a compromise on certain transactions. If there is a risk of losing a chargeback, it may be better to issue a refund instead of letting the purchase devolve into a chargeback.
21. Declining to learn how to spot potential fraud.
I’m not trying to be a fear monger here, but nefarious individuals love to cause trouble for business owners — specifically SMBs. While you may not be able to completely prevent attacks, you can lower those odds by knowing how to spot fraudulent activity.
Do your due diligence by making sure that the billing and shipping addresses match and being cautious of large purchases. Also, make sure that you follow security best practices like encrypting data and not falling for phishing attacks.
And, don’t forget to share this knowledge with your team as well.
The author is right. There is prevalent fraud, and we’ve seen many merchants scammed into sending expensive products only to find out that they accepted a fraudulent credit card or received a chargeback from a scammer. Fraud isn’t 100% unavoidable, but it is important to minimize the chances by implementing key procedures. Most transactions for a business should follow a pattern of purchase method, price range, shipping arrangements, etc. Be wary of unusual requests and international shipping. Verifying shipping and billing addresses are important and don’t be afraid to call a potential customer before shipping products. If you can’t reach a special order customer by phone, then wait to ship their product until you can.
22. Not undergoing stricter underwriting.
If you’re accepting credit cards for the first time, you’ll probably work with a processor that will accept your application with little due diligence. That’s fine for now, but when you reach revenue around $50,000 or more you’ll want to start working with a processor that is more strict with their underwriting.
In other words, they’ll assess how risky you are before you can accept credit cards. That sounds stressful, but it’s better than not being able to suddenly process credit cards.
Most traditional credit card processors use standard underwriting. The author is referencing signing up with a payment aggregator such as PayPal, Stripe, Square, etc. to accept lower sales revenue until a business becomes more established. Aggregators are easy to sign up with and begin processing immediately, but the lack of due diligence on the front end raises the chances of freezing funds or closing processing at the worst possible time. We would recommend merchants considering switching to a traditional credit card processor when their sales volume exceeds $5000 per month.
23. Choosing not to develop multiple merchant relationships.
This is a smart move since it prevents you from hitting the panic button when your merchant provider shuts down your account.
So, instead of working with just one processor, you would process 40 percent with one merchant account, 30 percent with another, and 30 percent with yet another. This way, if you get blocked with one processor, you can still accept payments through the other two.
This can get tricky, so work with an expert sooner than later to get this set up correctly.
Most traditional merchants will only need one credit card processor unless they have two or more very different ways of accepting payment, e.g., retail shipping and commerce. If a merchant is considered high-risk, then this advice seems more appropriate as they are continually sharing their processing volume among multiple providers and mitigating their risk.
24. Not keeping meticulous records.
In general, business owners are expected to keep accurate and detailed records. When it comes to credit card payments, this comes in useful when fighting chargebacks, such as customer forgetting that they made the purchase.
This is true, although much of the burden has been eliminated due to the introduction of POS systems and ecommerce transactions. For traditional retailers, restaurants, and merchants using written contracts, we recommend implementing organizational tools. It should be easy to reference transactions by date and customer name. Chargeback notices will have a date, so having the ability to search by date is critical.
25. Making it difficult for customers to contact you.
Finally, how can you provide excellent customer service and battle chargebacks when your customers can’t contact you?
Make it easy for them to get in touch with you by plastering your contact information, mainly your phone number and email address, everywhere you possibly can.
Along with recommendation 20, make it easy for customers to reach you and receive a timely response. Communication is important for any relationship, but especially for a merchant customer relationship. Merchants should also make sure that their online profiles are complete as many customers simply perform an internet search to find phone numbers, websites, and email addresses.
This article contains many excellent recommendations. Out of the dozens of articles we’ve previously reviewed, this piece has the most complete list of ways to optimize the process of accepting credit cards and minimizing pitfalls. The list is comprehensive and a little redundant. Most of the concepts are correct, but there are a few mistakes we’ve pointed out throughout our reaction. The first ten listed mistakes were more important than the final 15, so perhaps the author could have narrowed the list of 25 down to 15. Overall we are pleased with the piece.
We give this article a B.
Don’t Take On The Credit Card Processors By Yourself
Since 2009, IdealCost.com has helped hundreds of companies nationwide reduce their merchant account fees through identifying and fixing hidden profit, overcharges, fake fees, and billing errors. Clients have saved $300-$20,000 per month on their credit card processing fees without going through the hassle of changing their processing vendor, bank, or equipment. Switching credit card processors should be a last resort, only reserved for funding delays, poor customer service, or technical difficulties. Before you consider switching credit card processors, see if you qualify for IdealCost.com’s monthly savings program. Upload your most recent merchant statement for a free analysis. You’ll receive an estimate within 24 business hours.
If you are opening a new credit card processing account or switching credit card processors, feel free to contact us for a free consultation. IdealCost.com can help secure the best terms and fees based on your specific needs.