Sales are up, and so is fraud. Many credit card processors are still using antiquated systems which could hurt your business. Make sure to research prospective processors wisely so you don’t get trapped in a long-term, expensive contract with a processor who uses outdated equipment and gives poor customer support.
Our panel at the 2017 Government Affairs Fly-In discussed processor fraud and other topics impacting every direct response marketer’s bottom line. We were joined by moderator Chris Geron, Vice President, Global Card Brand Management, Elavon, and speakers Ryan Ellefsen, Managing Partner, Platinum Payment Systems, and Kevin Smith, Owner and Partner, Even More LLC.
What happens if sales drop and I only have one processor?
To consider another processor, Smith says to look at their policies first. Look at their warning processes to see what the repercussions are of sales dropping or increasing. And ask them the hard questions and understand the liability level which can help you get to know them on a high level.
Ellefsen says to ask your processor if they have a hard or soft cap on sales. Are they automated caps? What if you go over? Will your processor still take them? He says it’s a good rule of thumb to have a back-up processor in this industry. There are needs for multiple “merchant account” processors and this could be due to in part to business partners, products, volume issues, etc. Plus, you never know if your small bank will be consolidated or bought out.
How do processors calculate risk?
Ellefsen says that every processor will have their own criteria so this is why you’ll want to choose wisely. They will be watching the number of transactions coming through, and even more so in the first 30-60 days for new customers. Are your transactions suddenly coming in through the phone or internet? It’s important for you to alert them of any new changes in sales structure so as not to break their trust. Once you update your processor of any changes, they will update your risk profile. Proactive communication is key to alerting them of changes before they find out on their own.
According to Smith, each processor has their own risk system and will set parameters upon accepting a merchant. A general rule is that once you cross a certain threshold of steady sales or another factor, the processors will not be scrutinizing your business as much.
What we often forget is that credit cards hold a great deal of risk so we should make a conscious effort to pay them with respect. Especially when cardholders pay only their minimum monthly payments for three or so years. Be mindful that this is a line of credit that has been extended to customers.
How can you reduce chargebacks?First things first. Improve your customer service and be responsible for your credit card descriptors. What will your customers recognize when they read their bank statements? Adding a good phone number that will lead people directly to your help center is just another way to stay in their good graces.
About the Author
Bill McClellan serves as ERA's Vice President of Government Affairs. Prior to joining the association, Bill worked as a lobbyist at the Georgia Automobile Dealers Association, covering the state legislature and Georgia's congressional delegation. Before working for the GADA, Bill managed political campaigns at both the congressional and state constitutional levels.