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Credit Card Processing: When the Store Pays More

There are still cash-only diners and cash-only bars. But the cash-only retail store is definitely a thing of the past. However, that doesnt mean that retail stores should overpay for credit card processing. And yet many retail stores do exactly that: they pay more.

Here are some concrete suggestions for how to avoid that unpleasant fate.

Credit Card Processing Rule Number 1: Swipe That Card

Sometimes, when a credit card gets old or has been rubbing against another credit card in a customers wallet, the magnetic strip gets demagnetized. It wont swipe.

There is, of course, a way around this problem, and that is to punch the customers credit card number directly into the credit card machine. While that is occasionally necessary, to automatically go to this option when the card wont swipe costs money over the long run.

Inputting the credit card number manually rather than swiping the actual card can lead to as much as 50 percent increase in credit card processing fees for that particular transaction. This rise in cost is only logical, considering that everyone--the customer, the retail store, the credit card company--is more exposed to risk of loss when a physical card is not present.

Avoid these increased fees by asking for a different credit card. Train employees to do the same. Typically, customers have another card on hand.

Compare Credit Card Processing Statement Against Income Statement

Retail store owners should think like an accountant when it comes to credit card processing. The time it takes to do that sort of thinking can be reduced by setting up effective systems. In particular, its essential to match up the credit card processing statement with an income statement.

Retail stores, for example, frequently sell to people who later regret their purchases. Sometimes, such people do not bother with returning the merchandise to the store and asking for a refund. Instead, they call their credit card company and dispute the charge.

The credit card company takes the customers word for it. A retail store owner that is not tracking those invalid chargebacks can find herself quite literally paying for other peoples vicious shopping habits.

Fraud Is Costly, and Can Be Largely Avoided

An highly skilled con man can trick most anyone. Luckily, there are not too many highly skilled con men walking around. In fact, the vast majority of credit card fraud is usually avoidable. By setting up an effective protocol for how to handle credit card processing, a retail store owner can save herself a lot of trouble, and protect customers in the process.

The best protocol for one store may not be the best for another, but many good systems share similar strategies. For example:

  • Ask for ID, every time
  • Remember that the wifes credit card is not automatically the husbands credit card
  • Make sure signatures match up

By following these steps, and teaching employees to follow them too, a retail store owner can save significant money in credit card processing fees.


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