In any business, paying extra fees for downgrades or losing money on chargebacks are always present but avoidable if the following steps are taken with each transaction.
Avoiding Downgrades
A downgrade means you are being charged a rate increase because the type of card your customer is using has a higher processing cost or because you incorrectly processed the transaction. With retail/card swiped, keyed “MOTO”, and Internet accounts, you are charged one of four rates: debit, qualified, mid-qualified, and non-qualified.
The Qualified Discount Rate is applied when a standard consumer credit card is swiped or entered online correctly and the transaction is “batched” or “settled” within 24 hours. This is the rate you want to be charged more often than not.
A Partial/Mid Qualified Rate is applied when a Rewards card is used or when credit card info is entered manually, and AVS info is entered manually or not at all. These transactions are not settled within 24 hours.
A Non-Qualified Rate is applied when credit card info is entered manually, or in the case of MOTO and Internet accounts not entered at all, no AVS info is entered, a Corporate, Government or International card is used, and the authorization code is manually entered. These transactions are not settled within 48 hours.
How to Minimize Chargebacks
A chargeback is when a cardholder disputes a charge posted to their credit card account. This happens when a purchase is not authorized by the cardholder or when goods or services aren’t provided as expected. Good customer service and honest advertising should help you avoid such cases.
When accepting and swiping credit cards, make sure to complete the following:
- Always compare the signature on the receipt with the signature on the back of the card.
- Always examine the card to ensure it is not altered in any way.
- Request identification such as a license or some other form of picture ID.
When accepting credit card information without the customer present, such as over the phone or Internet, there is an increased chance of fraudulent chargebacks. To ensure the legitimacy of each transaction, complete the following:
- If appropriate, call customers to confirm their order if the billing and shipping or contact addresses do not match.
- Ask for the code number on the back of the card (or front with American Express®) to confirm that the card is in the customer’s possession.
- If you receive questionable orders, call to confirm the order with the cardholder.