About Security and Charge Backs

It is not uncommon to get notice that a customer has questioned a transaction on their statement and you need to provide details of the purchase. Sometimes it is because the name that shows up on their statement is not the same as your DBA, sometimes they just forgot and sometimes fraud is involved. Fraud is obviously the worst but if you do everything right you should be protected.

Your Responsibility:

  • Keep and provide proof of the transaction including your copy of the receipt from the credit card terminal.
  • Make sure the sale is entered properly, the card put into the terminal and pin entered. If you swipe a card with a pin you could be held responsible if it is fraudulent (soon you will not be able to do this).
  • For card not present transactions you are on your own if the sale is fraudulent you have to take the necessary measures to collect your money.

What You Can Do:

  • Keep your sales records including the merchant copy of receipts from the credit card terminal
  • Make sure you reply to any requests from your processor immediately,they are time sensitive
  • Make sure all sales are entered properly
  • Do not allow transactions to be entered manually (keyed) unless you know the customer and are sure it is on the up and up.
  • Have your terminal programed to need a supervisor code to enter any manual sales
  • Have your processor change your supervisor code to a unique code for you from the default code, the crooks know all of the default codes.
  • If you are delivering goods and taking payment online or by phone make sure the delivery address and billing address are the same if not confirm the reason.
  • Online payments are considered card not present and you are responsible if they are fraudulent. You can arrange to have the billing address confirmed for each transaction, compare it to the delivery address.

What is the Procedure When a Transaction is Questioned:

  • The networks (Visa, MasterCard, Amex etc) oversee chargebacks. Your processor has no say their involvement is retrieving confirmation from the merchants.
  • Chargeback fees are implemented by the processors and vary. Some processors charge a fee for the chargeback and a fee for the original query. This means if a customer questions one of your sales you are faced with a fee whether they are right or not, completely unfair in my opinion. I have seen merchants charged $50 for a $20 transactions query that they were able to prove was legitimate. They were out $30 because the customer forgot they had bought something from them.
  • Usually when proof of the purchase is submitted the customer acquiesces and agrees to pay, however I have seen customers fight a charge even in the face of overwhelming evidence and it can go back and forth for some time with no guarantee that the merchant will win out.

“Card-not-present fraud accounted for 78% of all fraud perpetrated on Canadian accounts month ending March 2017” [i]. The networks have done a good job improving security on card present transactions, emv (pin), has worked to eliminate a lot of fraud. Plans are in the works to eliminate a magnetic strips on credit cards, MasterCard has been experimenting with thumbprint identification in Europe and tokenization will soon become a standard in Canada.

Bottom line if you don’t have card not present transactions you are pretty safe if you do, be smart and protect yourself.

Visa has a lot of information on security click here


[i] Source Visa Canada

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