I should clarify. If the situation is that the chard holder makes a purchase and the item is not being delivered, the merchant does have a chance to make their case and either prove the product was delivered, or refund the money. This is if the shipping address is the same as the billing address and the card holder confirms they made the purchase. The point is that the credit card holder is not at risk if the merchant does not deliver the product.
The cases in which the credit card processor takes funds immediately from the merchant is when the card holder claims they did not authorize the purchase- that their card number was stolen and used. In that case the merchant is on the hook every time. Again, the important point from the credit card holder's perspective is that they are NEVER liable for fraudulent charges, unless they allow too much time (I think 3 monts+) to pass from the time of the charge. So as long as the card holder is reviewing their statement every month they are not at risk. I hear so much paranoia from people about using their card online when really it is the merchants who need to be (and are) paranoid about online transactions.
-Mike
Mike,
I respectfully disagree. It is my experience through a conversation with the processor about this exact issue that I have the information.
Would that I had my records still I could prove it to you.
Unless something has changed within the industry it depends on the level of security that one uses to charge cards.
You can set the level you require. I set my level to require, name address, and CCV#. It is PRESUMED by the credit card issuer that if a person uses a credit card and they have ALL that information then they are likely legimate and have control of their card. The merchant is not held liable in this situation any more than a merchant would be held liable if someone purchased something with stolen cash.
The Visa and Mastercard offer "fraud protection" as a marketing tool. If a consumer reports their card stolen in a timely manner then they are not liable for the purchases made against it. Visa eats the charges as they are not taken away from the merchants who were also innocent.
I have had this happen to me on a $500 case. Right after a tournament one week later I received a chargeback notice for a case that a person had purchased at the show. I provided the receipt and imprint (yes this was back in the time we still used them) But that was just for me. I charged the card using my phone through Merchant Services portal, which goes through just like a card not present.
The person who owned the card, the mother of the person who bought the case, claimed that her son had taken it and used it without her permission.
In any event the money was not immediately deducted from my account. And since I faxed back the proof the credit card processor asked for it was never deducted from my account.
It is true that the bank/credit card ISSUER will give the consumer the money back quickly or immediately on some claims. However it is not so cut and dried as to say that they pay immediately and deduct from the merchant immediately for any claims.
I just went through this as a consumer for a $110 charge. VISA offers what they call "Total Protection" or something like that for any card with the VISA logo on it, credit and debit cards where the debit card was used as a credit card. My own bank, Bank of America, told me I had to work it out with the merchant. I told them that the purchase was done over the net as a Visa charge. I had to educate my own bank as to Visa's policies and then they credited my account. HOWEVER they did so as a courtesy while the claim was being investigated and did NOT take the money from the merchant. Later the merchant relented and refunded the money to my account and my bank's automatic accounting properly debited the extra deposit from my account and all was good.
The bank reserves the right to take any money BACK from the credit card holder IF the merchant can prove that the transaction was done properly from their end.
It is misleading to say that the consumer is protected by use of a credit card. In some situations they are and some situations they aren't.
Now, with checks on the other hand I bet you didn't know than banks can deduct the funds from your account without warning for up to a year if the customer claims that the check was fraudulently used. When I found this out I drastically reduced the taking of checks.
Ironically though, if you do a check by phone as a merchant, this is called an ACS - Automated Clearinghouse Transaction, then this is super hard for a consumer to reverse. Or at least it used to be. All someone needs to use your account is your bank's routing number, the account number and sometimes your name and address, which is printed on the check most of the time. If you dispute an ACS transaction then your bank will tell you to take it up with the merchant. Good luck with that.
I did check with Roy Malott and he agrees with me on the issue of chargebacks. He said that in 17 years of taking credit cards he has not lost one dispute yet. He does of course require all the information when charging a card.
When I have the opportunity I will ask Heidi at CueSight how charge backs are handled with them. Her experience should be a better example as she does the same business as you with primarily automated sales over the net.
Back to the original topic though. For a merchant all ways of accepting payment have risks. Postal money orders can be counterfeit, cashier's checks can be counterfeit, checks can be fraudulent, credit cards stolen, paypal can be ironfisted.
In my OPINION the safest method outside of cash, is taking credit cards for the merchant.
Because the merchant can ask for as much identification as needed to back up the transaction. With all that there is virtually no way that they get debited for the transaction.
If they choose to go minimal and only use card number and expiration date then they will get dinged easily. If they ask for everything short of fingerprints and DNA then they are very safe.
Paypal? All bets are off there. Paypal is in their own world. The best I can tell you is to be nice because you need them and they do not need you. When everything is running smoothly with PP then it's the best there is. But when they start freezing your account and holding up money then you quickly find out how fragile those little electrons on yoru screen are.
