Merchants accepting credit cards.

webwonder

I run an online store selling high end designer clothing.
After several lost sales due to the only credit card payment i accepted was through paypal, i decided to invest in an online merchant account with a major U.K. bank.

The account went live 2 weeks ago.

I recently had 2 people using the same computer(I keep ip records), with the same postcode apart from 2 digits spend over £800 on my store, after checking the credit card transactions they had attempted another 6 purchases that had been rejected by the bank. Obviously something is amiss(i am warned by the credit card company of unusual spending practices!).
My merchant account costs me 5.5% commission minimum on purchases, so on the £800 they make £44 in commission, bad enough in itself, but i now have the choice, the bank has authorised the payment so everything should be ok???
NO if they are using someone elses cards, no only am i as the retailer responsible and have to pay back the bank, minus a chargeback fee and lose my commission £44 but i have also lost the stock which i would have sent out to the fraudulent customer.
Another example of banks ripping off small business's to an extent that they can no longer trade effectively.
I have decided to refund the cards and not take the chance, i still lose the £44 commission to the card company though, through something completely out of my control, surely it is down to the bank to check the authenticity of the card?? They seem to be in a win win situation.

Reaper

I was surprised to hear you say that the bank is not liable if they authorised the transaction. I looked into it further and discovered that they are liable for transactions where the card is presented in person, but not for card-not-present ones (ie telephone/internet orders).

This does seem unfair and every internet retailer must suffer financially from fraud problems. All I can suggest is to be wary and to build an allowance for a certain level of losses into your prices. I guess all your competitiors have to do the same thing keeping it a level playing field.

I'd have a moan to the credit card networks (Visa, Mastercard, Amex) and point out to them if one network changed the rules all the many internet companies would try to get their customers to use their cards. Don't hold out too much hope though.

Rafter

I'd look into this further with your bank.

There are a number of services now available which allow you to perform additional checks.

These include:

CVC verification (that is the 3 digit number on the back of the card) which proves it is not a cloned card.

Verified by Visa/Address verification. These are additional checks on the address you are sending the goods too.

If you are sending the goods only to the cardholder address you have a reduced fraud risk. Although there is a new fraud about where fraudsters call your card company, changed your address. Commit fraud and you have little idea as the statements are going to someone else.

I think the visa website has more info but I think you made the right choice in this case to reject the sale. Don't know why your merchant fee shouldn't be refunded in this case though - follow that up with your bank.

Good luck

R.

MattLG

Hmmm...
I run an internet business to and I suffer from the same problems as you (although my charges are slightly less). Refunds are a pain in the backside and they cost my business a hell of a lot because the merchant's commission doesn't get refunded and there's the additional charge for the refund (50p a time).

I think I might try to see if my credit card processing company will stop any payments without a valid CVC number or whatever it is. Do all cards have this number?

That could save me some money and a lot of worry.

MattLG

minormatt

Hi,

I have a small guesthouse in Whitby, North Yorkshire and we are wanting to take credit cards over the phone and in person and also possibly over the net. Could someone please advise which is the cheapest? and is there any credit card terminal/service review web-sites as regards prices, quality, customer service, ect. Ps Is it best to buy the terminal or lease?

Many Thanks, Matt.

Rafter

Matt,

For a small business, the cost of the machine and account may be prohibitive.

You may be better off using a payment system like paypal instead?

Because it is now compulsory to use chip and pin, the cost of the equipment or lease cost is higher so you may find it uneconomic to take payments in this way.

Another alternative is to club together with another local hotel or business and share the same terminal perhaps?

Good luck.

R.

thePhilster69

minormatt wrote:

Hi,

I have a small guesthouse in Whitby, North Yorkshire and we are wanting to take credit cards over the phone and in person and also possibly over the net. Could someone please advise which is the cheapest? and is there any credit card terminal/service review web-sites as regards prices, quality, customer service, ect. Ps Is it best to buy the terminal or lease?

Many Thanks, Matt.

We use WorldPay on https://www.winecharm.co.uk and we find it to be really simple to use. That would take care of your online payments. You can also, for a one-off fee, get set up with an online terminal, through which you can process phone/postal orders too. Total annual cost likely to be £150 or so, with £250 for the initial set-up, and 4.5% per transaction.

You don't need a merchant account from your bank (you get one thru WorldPay) which can be tough to get if you've little trading history with the bank. Charges are a little steep, but I'd recommend them over PayPal whose charges per transaction are steeper (from what I can recall) and if you want to take phone and online transactions, you'll not be able to do that with them...

HTH
Phil