Best Practices for Credit Card Processing

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Best practices for credit card processing

Best Practices for Credit Card Processing

Credit cards are the preferred payment method for many consumers today. They’re convenient to use, they often come with rewards, and they allow people to pay for things, even if their bank account is depleted for the time being. For your business, accepting credit cards is really a must if you want to be competitive. That said, two businesses could both accept credit cards but one may do so in a way that’s more secure, convenient and affordable. We’re going to look at some important credit card processing best practices all merchants should be aware of. Abiding by these best practices will benefit both you and your customers.

Goals for successful credit card processing

Three Goals for Successful Credit Card Processing

Before we discuss best practices for accepting credit cards, it’s helpful to look at the big picture. What are all these best practices aimed at achieving? There are three main goals that should guide the way businesses process credit card payments. These goals include convenience for the customer, protecting against fraud and keeping processing fees low.

1. Make Paying With a Credit Card a Convenient Experience

First, from the customer’s perspective, paying with a credit card should be a convenient experience. That doesn’t mean you need to sacrifice security measures to speed up the process, but it does mean you should look for ways to make your checkout process as efficient as possible. Customers should have a modern credit card reader that’s easy to use or clear directives for transactions that occur online or over the phone.

2. Protect Customers’ Data and Avoid Fraud

Many customers are rightfully concerned about their payment information being misused. In 2018 alone, fraud losses in the U.S. from credit, debit and prepaid cards totaled $9.47 billion. Merchants can help by taking security measures to protect customers’ data and to fight fraudulent transactions. Avoiding fraud also means you can avoid chargebacks, which come with retrieval request fees. Doing your part to keep payments secure will help you maintain a good, trusting relationship with your customers.

3. Keep Processing Fees Low

Another goal for merchants is to keep their credit card processing fees low. Paying with a credit card has become the norm for many customers, so paying exorbitant fees for every one of these transactions can eat into your profits. You can reduce your credit card processing fees in a few different ways. In this article, we’re going to focus on general best practices that can help you avoid fraud problems that can add to your processing costs.

Card-Present Best Practices

In a card-present transaction, the cardholder is there to swipe, insert or tap their card. These transactions take place in a physical business location at a point of sale (POS). Compared to a card-not-present transaction, which we’ll discuss more next, it’s easier with a card-present transaction to avoid fraud and make sure the payment is successful. That means there are fewer hoops you need to jump through, but there are still best practices you should follow to make the transaction go smoothly. Here are some best practices for ensuring the customer has a seamless experience paying with a credit card at your business and you avoid chargebacks.

1. Keep the Card Reader Easily Accessible to Customers

Typically, you want customers to insert or swipe their own cards. This means you should have a credit card reader easily accessible to the customer on the other side of the counter. A card reader attached to a tablet or phone you have to hand off to the customer is not generally the best option. Instead, use a dedicated card reader machine customers are familiar with so they can pay in a way that’s convenient and efficient.

2. Prompt Customers to Tap or Insert All EMV Cards

EMV chip cards are more modern technology than older magnetic stripe cards, making them more secure. This is because each EMV transaction uses its own unique code. According to VISA, merchants who accept EMV cards experienced a 76% drop in card-present counterfeit payment fraud from September 2015 to December 2018. If you don’t already have an EMV card reader, make sure you get one for your business, and prompt customers to insert or tap their EMV cards rather than swiping them. It’s also important to note that, with current regulations, if you swipe a chip card that should instead be inserted, you’ll be liable for any potential fraud issues that arise.

3. Ask for a Signature

In the past, it was standard procedure to sign for a credit card purchase. Today, EMV-compliant merchants are no longer required to get a signature from customers who pay with a credit card. However, some merchants should still require a signature from their customers. For example, by having customers sign their receipt, you may be confirming that they understand the terms of the sale, or that they’re approving an added tip amount. In situations of suspected fraud, you can also ask customers to provide identification.

4. Issue a Receipt

A receipt is an important record of a sale for both you and your customer. Customers don’t have to take their receipt, but you should always offer them one. By using a modern POS system, you don’t need to keep paper receipts. Instead, you’ll have a digital record of all of your sales transactions which you can refer to if a dispute over a transaction ever comes up.

Card-Not-Present Best Practices

Card-not-present (CNP) transactions take place when the customer and merchant aren’t processing a payment in person. E-commerce stores use this method for all purchases, but even businesses with brick-and-mortar locations may use CNP transactions for some sales. For instance, if a customer places a carryout/pickup order online or over the phone, they may provide their payment information upfront. Card-not-present transactions are a bit more complicated than card-present transactions, and they tend to come with a higher processing fee. The main issue is that it’s easier for a person to commit fraud with a credit card online or on the phone than it is in person, which is why you need to take some extra measures to make sure the transaction is genuine and secure. Following these guidelines can help you avoid fraud for CNP transactions and ensure a smooth experience for both the customer and you.

1. Only Use Secure Communication Modes

When you’re asking for credit card information to process a CNP transaction, you need to make sure your communication mode is secure. For instance, email and text are not secure ways to obtain payment information. Never ask your customers to send their card detail through these channels. Instead, stick to a form on your website and phone calls for obtaining customer’s information. Also make sure you keep this information stored securely if you need to hold onto payment information for recurring payments.

2. Obtain All Payment Details

You need to obtain all of the customer’s payment information, including:
  • Card number
  • Name as it appears on the card
  • Card expiration date
  • CVV code
  • Billing address
Those last two items are helpful security measures for preventing fraud. A card verification value (CVV) code helps to ensure the person entering the information has their card on hand, and a billing address can allow you to use an address verification service to ensure the address the customer entered matches the address listed for the cardholder.

3. For Pickup, Ask to See Credit Card

If a customer is paying online or over the phone before coming to your business to pick up an order, you can ask the customer to bring along the card they paid with. Asking to see the card is an extra step that can quickly help you confirm the person’s identity and prevent fraudulent transactions.

4. Document Deliveries or Pickups

Whenever you follow through on a CNP transaction by delivering goods or services to the customer or handing off a pickup order, you should document it. For deliveries of valuable orders, make sure the customer signs to confirm receipt. Keeping records of the follow-through on orders in addition to the payment transaction itself will help you address any problems that arise or combat unfair claims that you charged a customer without delivering their order.

Best Practices for Substantial Transactions

When you’re processing large or especially costly orders, there are a few considerations to keep in mind to ensure everything goes smoothly and you avoid any issues like fraud or disputes.

1. Verify Customer’s Identity

With a substantial transaction, it’s even more critical that you take any steps you can to verify the customer is paying with their own credit card and not committing fraud with someone else’s payment information. This could mean requesting a signature or ID for in-person transactions or verifying the CVV or address for card-not-present transactions. If you suspect fraud in the case of a CNP transaction, don’t hesitate to put a hold on processing the payment until you have confirmed it’s genuine.

2. Have Customers Authorize Payment Installments

When you’re accepting payment in installments rather than in one transaction, you need to make sure the customer authorizes every payment installment. If you can have the customer pay in person, that’s always better, but you may need to use a card-not-present transaction for installment payments. If so, make sure you are storing the customer’s payment information securely and only using it with their signed consent.

3. Get Written Permission for Recurring Charges

In the case of subscription services or other arrangements where you issue a recurring charge every, you need to make sure the customer is on the exact same page you are and is okay with these charges. This means you should have the customer sign a document that lists the transaction amount, how often they will be charged and the duration of the contract. Again, be sure to store the customer’s payment information securely.

4. Consider a Custom Rate Program

If your business processes a high volume of credit card payments, you may want to look for a merchant services provider that offers custom rates for businesses like yours. You need to make sure you get the best rate possible when you’re processing thousands of dollars in credit card payments each month. With NRS Pay, we offer custom rates to any business that processes more than $10,000 per month in credit card transactions.

What to Include on Receipts

We mentioned that receipts are an important record of credit card transactions. So, what information should you have on your receipt to help create a thorough record and help your customers? Make sure receipts include:
  • Your business name: Your business name should appear clearly in receipts and should match the name customers see on their credit card statement. This will help customers recognize the payment when they’re looking over their statements. If they don’t recognize a payment at first, they may dispute it, even if it turns out to be perfectly legitimate.
  • Your business contact information: Receipts should also display your company’s contact information, including your address, phone number, website and any other contact methods customers can use. Encourage customers to contact you directly rather than their credit card company if they think there’s been a mistake with a charge. This can help you avoid chargeback fees.
  • Your refund policy: It’s a good idea to include your refund policy on receipts, as well. For instance, you may let customers know they have a certain number of days to return items or list categories of items that are considered final sale. This will help you avoid any misunderstandings with customers.
  • Goods or services paid for: You should also list all the items a customer purchased or the services being paid for. If you’re using a rudimentary method for producing receipts, you may not be including this critical information. Instead, use a modern POS system that records all the items you ring up and uses an integrated receipt printer to produce detailed receipts.

Earn More With NRS Pay Credit Card Processing

If you need a merchant services provider to process credit card payments for your business, consider partnering with National Retail Solutions (NRS). With NRS Pay, you can take advantage of extremely competitive rates. We’ll even help you find ways to cut down further on processing fees. When you sign up with NRS Pay, you can get a free EMV card reader for processing payments securely. You can also get a uniquely affordable, top-of-the-line POS system for your business that will seamlessly integrate with the card reader. Our POS system is designed to keep customers’ credit card transactions secure. NRS is here to help your business process payments professionally and maximize your profits.

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