Being able to take credit card payments anywhere is extremely convenient, allowing a customer to transfers funds directly to your bank account. But that convenience does have a cost. Fees are deducted before they reach your account, so you may not notice them; that’s why it’s extremely important to pay attention to the types and amounts of fees your payment processor deducts. The fee deducted for an individual payment is obvious, but sometimes other fees can occur after a completed transaction, and it’s important to know what to look out for.
The fees that are deducted during your exchange with a customer can be “swiped transactions” or “keyed transactions.”
Swiped transactions occur when the customer’s credit card is swiped through whichever card reader you use with your device; a mobile version of how you pay at a brick-and-mortar shop.
A “keyed transaction” means manually entering a customer’s credit card information via keypad onto a processing device.
Fees may be different based on whether you are using swiped or keyed transactions. Swiped transactions usually involve the lowest fees. Keyed transactions involve manually entering a credit card number typically involve higher fees. A keyed transaction would be needed for taking an order over the phone, or if a credit isn’t present or isn’t working. These transactions not only deduct a higher percentage of a transaction, but each transaction is also charged a fixed fee. A food truck business will rarely have to handle keyed transactions, but if a customer’s card won’t scan in the card reader, it may have to be entered by hand.
On top of transaction fees, a mobile credit processing company may add additional fees in certain circumstances. Fees that may not be immediately obvious include receipt requests, non-sufficient funds (NSF), and others. It may take digging into the policies and documents of your processing company before you can pin down exactly what fees you might end up facing unexpectedly.
The most common free, “chargeback,” occurs when a customer tries to have the charges on their credit card reversed. This is not a fun situation, because not only is the money removed from your account, but each incident also results in your processing company issuing a penalty fee. Avoiding this should be a high priority for your business.
Chargebacks are inevitable when it comes to processing payments with credit cards; you must learn to accept that they are eventually going to happen. In the moment, it’s important to not feel upset and to remember that it is–unfortunately–a normal part of doing business and something that all businesses occasionally deal with.
Chargebacks are not the same as giving a refund upon a customer request. A chargeback is this: at some point after a transaction is completed, a customer requests that their bank reverse the funds and return the money they paid to their credit card. You will rarely be informed in advance.
This frequently happens because a customer sees a charge on their credit card statement that they think might be incorrect. It may also happen when receipts don’t clearly show the name of the business and the items that were paid for. The customer then complains to their bank, and the bank will usually reverse the charges; they are taken out of the merchant’s bank account and credited back to the customer. And unfortunately, banks tend to side with the customer and not the merchant. It’s best to do all you can to prevent chargebacks because you will rarely have the option to prove to your bank that the charge was legitimate.
There are a number of other reasons a customer might ask for a chargeback, and some of them are legitimate, like a bank error or duplicate billing. Chargebacks are, sadly, also used for fraudulent purposes by dishonest customers who simply don’t want to pay. Sometimes the credit card has been stolen, and the actual account holder asks their bank to reverse charges they didn’t make. No matter the cause, chargebacks can cause major problems.
Too many chargebacks can harm your reputation as a business and as an account holder badly; your processing company may even freeze your account. Chargebacks also accumulate substantial fees and penalties that you will be on the hook for.
Avoiding chargebacks should be a high priority for your business.
Some suggestions for preventing chargebacks include:
Make sure customers know everything they need to about what they’re buying, by describing your product clearly anywhere a customer may see information about it. Manage their expectations about exactly what they’re getting both verbally during the transactions and in any marketing/promotional materials they may see later.
An easy (and easy-to-understand) policy for refunds:
It’s much better to issue a refund than risk a chargeback later. If they dislike a product, you can offer a substitution or an extra, but a customer who is unhappy with their transaction is more likely to request a chargeback from their bank.
Don’t accept expired credit cards
Sometimes technical glitches will allow expired credit cards to continue to work but even if it seems like a transaction is successful, it may lead to a chargeback. So always check expiration dates and never accept expired cards.
Always ask for a signature
In some stores, a signature is no longer needed for a credit card transaction, but your truck should always obtain one and make sure the mobile system you use is set to require signatures on every exchange. If you want to verify a signature, you can ask to look at the customer’s driver’s license or ID.
Make sure customers know who you are
This is easy to overlook, make sure that any receipt a customer gets includes the name of your business, address, and contact info. A customer with no memory of a transaction who is unable to identify the business the charge came from is much more likely to request a chargeback.
Show the full transaction
If a customer doesn’t remember their visit, and all they find on their receipt is a price, they’re more likely to be suspicious of the charge. Request itemized receipts from your card processing company, or find a way to make sure customers know what they spent money on.
Generally, your receipts should be easy to read and easy to understand. A customer who is confused about anything is more likely to request a chargeback. And if you choose to fight the chargeback, it will be helpful to have as much information about the purchase as possible to give to your bank or accountant.
Make sure customers have a great experience!
Pleased customers who like and trust you are much less inclined to request chargebacks, so make a good impression with first-time customers and provide outstanding service to everyone who visits your truck.
Chargebacks are disheartening and costly. These tips will help you see fewer of them, to keep your stress levels down and your business thriving!