Best Practices for Accepting Card Payments

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Card payments offer customers a simple and comfortable payment option for purchasing products or services. With around 70% of Americans having at least one credit card, and over 173 million cardholders as of 2018*, deciding to accept credit card payments allows you to tap into an increasingly large audience and expand your customer base. It’s a no-brainer that accepting card payments can be hugely beneficial for both your customer and your business.

Best Practices for Accepting Card Payments

But accepting card payments has its fair share of challenges, such as payment fraud and chargebacks. This can cause your business to lose time and resources in settling disputes. The specific kind of challenges you face depends on whether the customer and their card are physically present with you during the transaction, or you only have the customer’s card details. By taking certain precautions while accepting card payments, you can ensure your business is not bogged down by these problems.

There are two main ways to accept card payments: card-present transactions, in which the customer and their card are present for the payment; and card-not-present transactions, in which you have access to the customer’s card details but they are not present. This article will look at some of the steps you can take to prevent problems with each type of transaction.

For card-present transactions:

If your customer comes to your store and presents their card for payment, you will be able to verify the customer’s card information and confirm that they’re the card owner fairly easily. You will also be able to instantly communicate with them if any error occurs during the transaction, as they are present right in front of you. There are thus fewer issues that can come up when your customer and their card are present during the transaction. These transactions are still however vulnerable. Following these steps can reduce the chances of any error during a card-present transaction affecting your business.

1. Use EMV cards instead of magnetic-stripe cards.

Why: EMV card are a lot more secure than magnetic-stripe cards. Credit card companies regularly introduce regulations to ensure EMV (Europay, Mastercard, Visa) or chip transactions occur smoothly and safely, as EMV chip cards are a lot more secure than the traditional magnetic-stripe cards. EMV cards are harder to clone and have much more sophisticated encryption. Any time you swipe a card rather than read its chip, you become responsible if any error or breach of security occurs during the transaction. Any fraudulent transaction  may also be pinned on you. This places you in a position of responsibility should the customer raise a dispute as a result of the transaction.

EMV cards can also be used for contactless payments where the customer simply taps the card on a machine. These contactless transactions use NFC (Near-Field Communication), a personal network between two machines, which is a lot less susceptible to attacks than standard wireless transactions. Magnetic-stripe cards’ security is rather outdated in comparison.

2. Don’t forget to provide the receipt.

Why: Without a receipt, there is no proper record of the transaction. Customers could deny ever having purchased your goods or service, and claim that funds were drawn from their account without their authorization. You’ll have to settle the dispute and possibly refund the entire amount as a chargeback. This means your business incurs a loss, and it also increases your chargeback ratio.

3. Confirm the transaction amount with your customer.

Why: Customers can raise disputes about amounts which they did not agree to pay. Always make sure to confirm with your customer about the amount you will be deducting from their card so that you can avoid these situations.
This prevents customers from raising disputes for unexpected transaction amounts.

4. It doesn’t hurt to check your customer’s ID.

Why: ”It’s easy for any fraudster to steal a credit card and use it for their own purchases, and the volume of such thefts is at an all-time high.“. If the fraudster purchases a product from you using the stolen credit card, the actual owner of the card can dispute the unauthorized transaction and demand a refund. Checking your customer’s ID to verify that the card they are using is actually theirs reduces the chances of your business being involved in fraudulent transactions or being forced to issue refunds.

For card-not-present transactions:

Suppose your customer provides you their card details online, through a customer portal, or over the phone. This makes it harder to communicate with them if any error should occur or you face any problem during the transaction. Without the customer or their card actually present during the transaction, your business is more susceptible to the risk of fraud since there is no way for you to verify that the person using the card is the actual card owner. In such cases, following these steps can help mitigate the risks involved.

1. Make sure to get card details correct.

Why: When obtaining card information from a customer who is not present, it can be easy to incorrectly record a detail, which can lead to a voided transaction. Make sure to get the card number, expiration date, name on the card, CVV (on the back of the card), and billing address from your customer correctly.

2. Get delivery confirmation.

Why: Getting confirmation that customer has received the product or service means they cannot later deny receiving it and file for a refund. You can get confirmation by keeping a delivery receipt and encouraging the customer to complete a service/product review after the purchase.

3. Use the Address Verification System (AVS).

Why: If the customer’s billing address does not match the address on file with the card issuer, it could indicate that the customer using the card is not the actual card owner. Verifying your customer’s billing address helps ensure that you don’t run into any disputes. You can do this by using the Address Verification System (AVS), a service which allows merchants to check whether the customer’s billing address is the same as the one on file with their card issuer.

4. Avoid voice authorization.

Why: Voice authorizations cannot be relied upon as evidence of transaction confirmation, and cannot protect you from chargeback disputes. This makes your business vulnerable. If you are not able to obtain an electronic authorization, try initiating the transaction at a later time instead. Avoid using voice authorizations as much as possible.

5. Get written cardholder permission for recurring payments.

Why: Customers have the right at any point in time to claim that an amount has been debited from their account without their authorization. It’s thus important for you to obtain and maintain a recurring charge mandate from your customer that authorizes you to pull funds from their account periodically. Make sure the mandate clearly states the terms and transaction details including the transaction amount, the period through which charges will be made, how frequently funds are pulled, and the customer’s signature.

Keep your business safe:

While accepting card payments does open up your business to more customers and consequently more revenue, it also opens up avenues through which your business can be attacked. By keeping these security measures in mind, you can mitigate the chances of your business being hit by fraudsters and fraud-related chargebacks.

Source: *2018 Credit Card Debt Statistics – Average US Debt (2018, May 24). Retrieved from

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