US Bankcard Services Industry Blog

Thursday, February 18, 2010

Bankcard Services: MO/TO

First, let me say that anyone that has worked in the merchant processing industry for a significant number of years will have some very interesting stories. Just ask them – most are more than willing to share. And if you spend enough time listening, I guarantee they will have one that will make you laugh uncontrollably, one that will make you sit back and wonder “What were they thinking, seriously?” and one that describes that moment that changed their career or their lives. They may not tell you that last one, but trust me, it exists. On that note, I’ve been given the opportunity to share some of my stories with you, here - in this forum. I’m not sure how successful it will be, but I hope that at the very least you will be a little educated and maybe even entertained. So…here it goes: Several years ago an account representative came to me explaining that they were getting confused while trying to match up the services that were right the company they were speaking with. I asked the rep a few questions about the company then had him give me a copy of their processing statement to review. I was so surprised at what I saw that I asked the rep to call the merchant back and request a copy of their processing agreement. Even though it was an unorthodox request, the merchant accommodated our request and faxed it over. The merchant - who was in the Mail Order / Telephone Order (MO/TO) business - was paying retail rates on their account! Not only that, but they had never been told about AVS (Address Verification System), Code 10 or even the difference between Retail and MO/TO pricing. I was appalled. So I had the representative get the merchant on the phone and went over how necessary it was for a MO/TO merchant to ask for an alternate form of payment if the AVS information does not match. You see, if the person giving you the credit card info doesn’t know their own address that’s a big red flag that the card may not be theirs. And if the card is not theirs, a chargeback is almost guaranteed. I also explained that the term Code 10 is bank-speak for “Something may possibly be very wrong with this card– call your service center immediately!”. This is another tool that helps the merchant stay away from bad cards. It could be telling them that the cardholder has placed a precautionary flag on their own account and my need to provide a code work for the card to approve, or it could mean that that card is stolen. If the merchant doesn’t call, there’s no way to know and it could be an expensive lesson. Finally the pricing – this was my biggest concern. I went over how he was being charged an excessive amount on a monthly basis just because he was being charged like a retail merchant. Because he was set up as a retail account, the bank was expecting him to physically swipe cards through a terminal or to use a POS system. Since he was keying everything in, he was being charged extra for every single transaction. That amounted to about $260 in erroneous charges every month!!! Can you imagine!! That’s over three thousand dollars a year he was putting directly into the pocket of the rep that sold him instead of educating him. Nowadays, the industry has required additional tools be utilized that protect merchants by making sure the person giving the credit card information is the person the card was issued to in the first place. And although there will always be less-than-scrupulous persons out there ready to pounce on and exploit an opportunity, the ultimate defense will always be available to merchants – it’s called information. U.S. Bankcard Services, Inc. will provide as much information as possible to assist you in protecting your business. Remember, one wrong transaction, if left unprotected, can cost you more than you think. Call us with any questions you may have – our Customer Support department can provide you answers in 9 different languages including English, Chinese, Mandarin, Cantonese, Spanish, Japanese, Korean, Taiwanese, Vietnamese. And don’t forget to check back with us here on our BLOG periodically – you might enjoy what you find!