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The "Other" Option – No Merchant Account Required If you read last week's instalment, you might think that there are only two options to process online payments. But there is a third option... well, sort of. If you have little cash on hand, or sell a limited number of products, you can try one of the alternate processing companies (called third party processors). Instead of paying setup fees, transaction fees, statement fees, discount fees and the like, you’ll simply pay 10-20% of the sale price of each product. We don’t recommend using these companies in the long-term. They're excellent if you are just starting out and you don’t need the cash from sales right away (CCNow, for example, withholds part of the proceeds from a sale for up to three months to protect against chargebacks) but in the long run they will end up costing you a lot more. Once you’ve generated enough capital to support a real merchant account for your company, get one. If you’re a non-US based business, the best way to go is to use a 3rd party processor, at least until the cost for a real merchant account drops. Many of the companies below support both US and Non-US based businesses: Chargebacks and Fraud Chargeback - the word that Internet merchants fear. A chargeback is when a transaction is reversed. In other words, rather than adding money to your account, it is deducted. Chargebacks can occur for a wide variety of reasons, such as double-charging, credit card expiration, bank errors, and customer disputes. If your Merchant Account incurs too many chargebacks, there's a possibility that you will loose your account. Once this happens you'll be placed on the Visa/MasterCard MATCH list for several years. All Merchant Account Providers have access to this list, and if they find your name on the list, they'll usually decline to issue a Merchant Account to you. But if you're one of those merchants who have lost their Account, there's still hope. Bank Card Law specializes in helping companies who’ve lost their Merchant Account due to excessive chargebacks. Here are some tips that can help eliminate chargebacks: 1. On your order confirmation page, make a note to the customer as to the name (phone number, email address, etc.) that will appear on their monthly credit card statement. 2. Also include a note about these details in the email confirmation that your customers receive when an order is placed (they do get one don't they? If not, they should... it's good for keeping records). 3. Use Address Verification. People who order products with a stolen card number will never use the real cardholder’'s billing address, so this is your chance to stop the order before its too late! 4. Scrutinize orders from foreign countries. A large percentage of fraudulent Internet purchases are made from Indonesia, Russia, and other eastern block and developing countries. 5. If an order seems suspicious, call or email the customer and attempt to verify anything you can about them. Pay attention to strange orders and then follow up. 6. And lastly, if you ship a product, attach a note to the customers invoice. And always keep copies of transactions, so that, if you're ever challenged, you have some kind of defense. Unfortunately, online credit card fraud is very prevalent on the Internet. The best thing that you as a merchant can do to reduce the cost of fraud is to be informed. I highly recommend that you dedicate several hours to the exploration of the Websites below, and to the implementation of as many of the suggested strategies as possible within your ebusiness:
In almost all cases, you'll be held responsible when a fraudulent credit card is used on your site, and you will be charged for the sale. Alas, authorities are unlikely to get involved in a fraud case unless very significant amounts are involved, although you should not hesitate to report each and every case of fraud that occurs. |
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