Protect your business: best practices for accepting credit cards

Accepting credit cards is convenient for your customers, and gets you paid faster, but as with any financial transaction there are risks and precautions you should be aware of. Fortunately, observing some simple merchant best practices will go a long way towards ensuring you never encounter any problems with your card payments.

Chargebacks

When you pay for goods or services on your credit card, you enjoy certain protections. For example, if you buy goods online for delivery and they never arrive, you can ask your credit card company to refund your money. Similarly, if your supplier takes a deposit and never completes the service they promised, or if goods or services are not of the quality agreed, your credit card company can get your money back.

When you process credit cards for your customers, they have exactly those same protections - and it is you who must be careful to make sure you are delivering the products and services you have agreed.

Remember, chargebacks occur when your customer contacts their bank to dispute a payment appearing on their credit card. They do this for exactly the same kind of reasons that would cause you to dispute a charge on your account, for example:

  • Your customer was not satisfied with your product/service,
  • Your customer never received the product/service they paid for,
  • Your customer does not recognize the charge on their bank statement.

Protecting yourself from chargebacks really involves little more than the kind of good customer service actions you are no doubt taking today:

  1. When setting up your Payments by Wave account, ensure you choose a Bank Statement Descriptor that accurately reflects your business. If your customer clearly recognizes your business name on your bank statement, they are much less likely to question the transaction.
  2. Verify the identity of the cardholder. Whenever possible, confirm that the identity of your customer matches the cardholder name to ensure your customer is not using a stolen or fraudulent credit card to pay you. Some business owners have the luxury of meeting their customers face to face and others will request a proof of ID prior to providing remote services. This will help to protect yourself from Chargebacks claiming to be fraud.
  3. Have a written agreement with your customers. Preferably, this would be a signed document that outlines the full terms of service, what is to be expected of your product, and any return/refund policies. Creating a follow-up survey or email to confirm satisfaction with the product/service can help to identify any issues before they reach the Chargeback level, and also be valuable evidence in your favor if your customer does choose to issue a dispute.
  4. Keep good records of correspondence with your customers (the more through text the better!). If you do receive a chargeback, it will be your job as the merchant to provide evidence to Wave in order to dispute the chargeback on your behalf. In order to build the best case possible, in addition to the items outlined above, on-going correspondence through email or text message can be very helpful in closing a dispute in your favour.

Fraud

One common type of fraud catches out more new card merchants than any other. It goes like this: a new customer contacts you; they are very keen to purchase your product or service. (In fact, they may be in a great hurry!) To help them purchase from you, they are going to ask you to pay someone else on their behalf for a service that is somehow related to what you are selling.  Of course, they will pay you the extra for the third-party service on their credit card.

Never transfer funds to an unknown third party!

Typically, your new "customer" will attempt to pay with a stolen credit card. If you fall for this fraud, you will be out of pocket for your goods or service; out of pocket for the money you transferred to the third party (they've disappeared now!), and out of pocket when the real owner of the stolen credit card disputes the charge on their account and you suffer a chargeback.

If this sounds scary, just remember this fraud is so easy to avoid.  If a "customer" wants you to pay anyone else, don't do it, and take it as a signal not to deal with this customer at all!

If you are ever unsure or suspicious of a customer or recent transaction, please don’t hesitate to contact us! Our team will do a thorough review of the transaction and offer our best insights. In general, if you are ever suspicious of a new customer you may want to err on the side of caution.

If you have received a suspicious transaction you can issue a refund for free directly within your Wave account or contact us at payment-support@waveapps.com to issue the refund on your behalf.

For a more thorough breakdown on Chargebacks and how to protect yourself, check out this awesome FAQ article: Understanding and Avoiding Chargebacks

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