Simpler Smarter Savings

Business people must have a basic understanding of how credit card processing works to help them avoid costly and frustrating charge backs that can eat into their bottom line. Charge backs usually occur at the time of completing transactions, and all business people with merchant accounts face a risk of incurring them. Fortunately, a few simple steps will go a long way in preventing this complication.

People often initiate charge backs if they:

• didn’t authorize concerned charges
• don’t recognize certain charges on their statements
• receive damaged items
• don’t receive the items they purchased

However, it is important to realize that just as there are fraudulent businesses online, some “customers” have ill motives. Yet the proliferation of scams encourages credit card processing companies to favor online customers during a dispute. If businesses take the following measures, they will protect themselves against both genuine and fraudulent charge backs.

Point of Sale Terminal

All cards should be swiped through a magnetic stripe reader for face-to-face transactions. Merchants can key-enter account details if there is a problem and the card is embossed and then use a manual imprinter to make an imprint of the embossed details. Only one imprint should be made for each transaction to avoid duplicate deposits.

However, they must not key-enter any transaction if the card is not embossed. It is important to have proof that the card was present during the transaction.

Cardholder signatures are required for all card-present transactions. If cardholders deny participating in or authorizing transactions, merchant accounts can incur a charge back for “no signature.”

Deposit of Receipts

If sales receipts are not deposited with merchant banks within one to five days, charge backs may be imposed for “late presentment.” Late deposits of credit receipts can lead to “credit not issued” charge back.


Many customers initiate charge backs when they do not recognize charges on their statements. Businesses must ensure receipts clearly provide the nature of transaction and contact details to avoid confusion.

Online items must be described accurately, preferably with clear pictures to prevent buyer disappointment.

Depositing Transactions

Transactions should only be deposited after shipping related merchandise.