Tuesday, June 5, 2012

What Everyone Should Know About E-Commerce Merchant Account Services

What Everyone Should Know About E-Commerce Merchant Account ServicesThere are certain basic pieces of information that all e-commerce merchant account services users should know. All merchants:
  • Are required to authorize their bank card transactions. If the account funds are present and the card has not been reported as lost or stolen, the payment will most likely be approved by the card issuer. For online merchants, it is critical to remember that an authorization approval is not a proof that the real cardholder is making the purchase or that a legitimate card is used.
  • Are subject to the Associations' chargeback rules and regulations for non-face-to-face transactions. A web-based merchant can be held financially liable for a fraudulent transaction, even if the payment has been approved by the issuer. This is due to the fact that there is a far greater chance of fraud resulting from the absence of a card imprint and a customer signature. E-commerce merchant account services users, however, can limit their fraud exposure with the adequate web-specific risk control infrastructure.
  • Must include an Electronic Commerce Indicator (ECI) for all online transactions. When provided as part of the authorization and / or settlement message, the ECI indicates that the transaction was an e-commerce one. This then allows the issuer to make a better informed authorization decision.
Issuers have at their disposal 120 days from the transaction date to charge back a transaction in which the consumer claims to have not taken part or to have not received what she purchased. This translates into the possibility that a fraudulent payment can end up presenting a substantial risk to the e-commerce merchant account services user long past the day on which the transaction was processed.

In fact, web-based merchant chargebacks have been quite similar to those for direct marketing (MO / TO) and card-not-present (CNP) - between 0.20% and 0.30% of sales volume. Some online merchants with insufficient or no fraud controls in place, however, are experiencing losses of 10% or higher.

In the e-commerce payment processing environment, the shipment date is taken to be the transaction date. Additionally, e-commerce merchant account services users have up to seven days to get an authorization approval from the transaction date.

The Associations' operating regulations apply to all online businesses that take credit cards. In implementing these policies and practices, web-based merchants should never violate Associations' rules by:
  • Imposing any surcharge fee on the card transaction.
  • Using the bank card or account number to collect other debts or bounced checks.

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