At 8/8/01 6:50 PM, CDale wrote:
>BTW, what kind of experiences have you guys had w/ merchants and
>verification? I was told to verify myself to make sure, but a FNB guy
>came by my shop the other day trying to sell me an account/equipment, and
>he assured me I wouldn't get chargebacks, cuz FNB does verification.
That's rich. He's either clueless, or lying to you. (Merchant account
salesmen always say you won't be charged for something you will actually
be charged a lot for. The challenge is asking enough questions to figure
out whether they're doing it intentionally. Make a game out of it -- you
can get literally seconds of enjoyment out of this.)
Anyway, there is no way to avoid chargebacks. Chargebacks occur under
VISA and MasterCard rules when the card-issuing bank (NOT your merchant
services provider) refuses to pay a charge because the cardholder says he
did not make the charge (among other situations).
In a "card not present" transaction, unless you have a signature that
matches the cardholder's, or something similar such a signed delivery
receipt for physical merchandise, it WILL be a chargeback unless you can
get the cardholder to drop his claim. End of story.
Put another way, those VISA ads that tell consumers they'll "never have
to pay for charges they didn't make" can say that because VISA never pays
merchants for charges the customer claims he didn't make. (You didn't
think VISA gave that money back to customers out of their own pocket, did
you?)
You'll occasionally hear merchants say they "fought" a chargeback; in
fact, what they did is get the cardholder to drop his objection (perhaps,
for example, when the cardholder sees a copy of an invoice provided by
the merchant, he realizes he lent the card to his son to buy a domain
name -- or perhaps the cardholder was lying, and a phone call from the
merchant convinces him he might get caught). Unfortunately, that's rare.
In my experience, 90% or more of all transactions where the issuing bank
requests a copy of the invoice (so that the customer can review it) end
up as chargebacks, and when I bother to look into them, they really do
look like innocent people had their cards stolen (for example, they live
in Idaho but the transaction came from a Russian dialup connection).
Regarding the "verification", your salesman probably means address
verification, or AVS, as someone else pointed out. This tells you if the
address provided by your customer roughly matches the address of the
cardholder. If it does, the charge is less likely to be fraudulent,
because it means the crook had to get access to the cardholder's address
as well as the card number. (If it doesn't, it's up to you whether you
wish to proceed with the sale.) However, it's certainly not a guarantee:
the chargeback will come if the customer says the charge was fraudulent,
even if the address did match. (And you can't check most non-US
addresses, anyway.)
The answer to this problem, if you're wondering, is SET or a similar
secure protocol. However, SET isn't going to happen, simply because VISA
and MasterCard are making too much of a profit off the current system
(for a start, they keep the commission on charges that are subsequently
charged back). The credit card industry makes the Microsoft monopoly look
like sweet children at play, and when I'm running the country, the
government will crack down hard on it (there actually is a Department of
Justice investigation into it, which I hope is ongoing, although that
sounds like just the kind of thing they'd be killing right about now).
--
Robert L Mathews, Tiger Technologies
