There may be times when a customer wants to purchase an item or service from you by giving their credit card information over the phone. Allowing for this type of card-not-present transaction provides the buyer with their preferred way to pay, which can definitely be a plus for your business. However, before you accept telephone payments, you should know the risks they come with as well as how to mitigate them.
Why phone transactions are riskier:
When someone buys an item at your physical store using a credit card, you can take steps to prove that they are who they claim to be by asking for ID. If you’re in doubt about a person’s integrity, you can also request to see their credit card to check for tampering. These avenues of fraud reduction are not open to you during card-not-present transactions, which explains why some companies charge a “convenience fee” to process orders by phone.
How to minimize the chances of fraud:
While you can never be 100 percent immune from being a victim of retail criminals, there are a few things you can do to protect yourself. These include:
- Obtaining the buyer’s signature when the product is delivered.
- Being diligent about taking down all of the customer’s information when they make their order, including their card number, CVV code, expiration date, and ZIP code. Don’t forget to ask the buyer to specify exactly how their name appears on the credit card.
- Asking the customer to give you contact information that you can use to get in touch with them in case of problems, provided your state allows you to do so.
- Writing “phone transaction” on the receipt or signature screen for all manual transactions.
An increase in the likelihood of disputes.
When transactions take place over the phone, instead of directly through your point of sale system, there is also an increased likelihood for disputes. This is because the buyer has not seen or touched the product. Moreover, the person may not have a long-standing relationship with your business.
Disputes occur most frequently when customers believe they have been incorrectly or prematurely billed for goods or services. They also can happen if a buyer receives a product that they believe to be damaged, or different from what they expected. Finally, many problems between sellers and buyers happen around a merchant’s return and exchange policy.
How to help prevent disputes:
The vast majority of disputes can be halted before they even happen. Watch out for the red flags of fraud described above. In addition, scrupulously describe the product the customer will be receiving to ensure that there is no doubt about what has been ordered. Once the order has been accepted and shipped, bill the customer. Finally, prominently post your return policy both in-store and on your website. Transparency is one of the most foolproof ways to reduce the frequency of disputes.
Taking credit card payments over the phone, as well as online, and in person, gives you one more way to bring in profits. At the same time, this practice introduces an increased chance of risk. By being careful and transparent in how you obtain and track the information that customers provide to you, you can keep fraud and disputes to a minimum.