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Credit Card Processing Best Practices for Small Business

David Iafrate

Founder and Chief Executive Officer at International Bancard
David Iafrate founded International Bancard in 2001 with the goal of putting a more human face on the payment acceptance industry. David maintains hands-on involvement with each of the company’s partners across the United States, leading a true family of clients – from mom-and-pop shops to professional sports stadiums – representing more than 60 unique industries. In 2015, recognizing the everyday importance of credit acceptance to real people leading real lives, David oversaw the development and national launch of Property Payments, an International Bancard proprietary software program designed to streamline the rental process for landlords and tenants alike.

Implementing best practices in credit card processing will help you decrease the likelihood of fraudulent transactions and chargebacks. Technological advances like the new EMV chip enabled credit and debit cards have been issued in order to prevent fraudulent charges. Ensure you are only using service providers that are PCI DSS (Payment Card Industry Data Security Standard) compliant to maintain the proper level of security for accepting credit cards.

As the founder and CEO of International Bancard, I can help you understand the best practices for credit card processing that I have learned by working in this industry for the last 15 years. These best practices can help you limit your risk in accepting payments as a merchant.

Card-present best practices

Card-present transactions have both the card and the cardholder present at the time of the transaction. With most transactions, the cardholder is the one inserting their EMV chip-enabled card into the terminal. Merchants associated with card-present transactions include retail stores, electronic stores, specialty shops and boutiques, and even gas stations. In these environments, merchants must take all reasonable steps to ensure that the card, cardholder and transaction are authentic.

Use the following best practices when accepting chip card-present credit or debit cards:

  • Make sure the chip-reading device is easily accessible to the cardholder
  • Ask the cardholder to insert their card into the terminal and leave it there for the entirety of the transaction
  • The chip and terminal will decide if a PIN or signature is required for the transaction
    • If a PIN is required, the cardholder will be prompted to enter a PIN. If the PIN is approved, no signature is needed
    • If the cardholder does not know their PIN, request another form of payment
    • For signatures, ask the cardholder for their card to compare signatures from the receipt and back of their card. If the card is unsigned, do not accept it
  • If for some reason the chip-reading device cannot read the chip on the card, follow “fallback” requirements and accept the chip card via magnetic strip transaction processing

Swiping a card via magnetic stripe can increase your risk of accepting a fraudulent card. The Fraud Liability Shift on Oct. 1, 2015 was to protect merchants from counterfeit cards and fraudulent charges by shifting the liability for chip card-present fraud to whoever is not using the chip technology. So make sure to first try accepting card-present payments via chip card.


Also on StartupNation.com: Accept Online Payments with Ease


Card-not-present best practices

Card-Not-Present (CNP) transactions are generally completed through internet, mail or telephone orders (MOTO), infomercials, or telemarketing. CNP transactions provide challenges that do not occur in the card-present environment. Merchants are presented with problems such as fraud detection and prevention since authenticating and validating the card is difficult in a card-not-present environment. Despite these challenges, CNP transactions can prove profitable for businesses because goods and services can be sold beyond a business’s location and is convenient for customers.

Following these guidelines can help you avoid fraud for CNP transactions:

  • Obtain the correct information from the cardholder, including:
    • Account number
    • Name as it appears on card
    • Expiration date on card
    • Billing address
    • Shipping address, if applicable
  • Get an authorization
    • If you receive an authorization, but still suspect fraud:
      • Request additional information such as the financial institution name on the card
      • Confirm the order separately by sending a note via billing address rather than the ship-to address
    • Utilize fraud prevention tools such as Address Verification Service (AVS) or Card Verification Value 2 (CVV2)
    • Ensure timely processing between the time the order is placed and the time goods are delivered
    • Do not ship items to hotels, office lobbies or post offices. Without a permanent address, you can’t verify if the shipment has been received
    • Require the card to be presented if the order is to be picked up at a retail location

Following these best practices can help you prevent accepting fraudulent charges with regards to CNP transactions.

If you are interested in accepting payments, whether in a card-present or CNP environment, visit https://startupnation.com/InternationalBancard/.

International Bancard is a nationally recognized industry leader with businesses relying on their market insight, data security knowledge and client care to deliver exceptional services to more customers in more locations. They can provide you with tailored payment acceptance solutions that drive business growth!

Content provided by International Bancard

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