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The Green Sheet Online Edition

May 11, 2009 • Issue 09:05:01

Protect merchants with the basics

By Biff Matthews
CardWare International

When money is tight, we forgo trips to the cleaners and haul out the ironing board, dine out less often and make purchases more judiciously. Difficult times tend to drive people back to the basics. When doing business in a down economy, it's time to review expenses and look for ways to cut overhead costs. For those processing transactions, "the basics" are an imprinter and a sales slip.

Why are imprinters and sales slips important to your merchants? Why promote 20th century technology or ask merchants to invest in a device that may never be used? The answer: Many chargebacks could be avoided by ensuring that merchants have imprinters at all their locations. Of course, it also helps to know where, when and how to use them.

A painful truth

Here's a true story that exemplifies the point. A well-known hotel in a major resort town is fighting an illegitimate $1,400 chargeback without a leg to stand on. Why? A cardholder (in this case the actual cardholder) checked in with his wife for an extended weekend that included spa treatments, dinners with wine - the works.

The magnetic stripe on the man's card was unreadable when the couple checked in, so the clerk keyed in the account number, expiration date and a hold amount, and received an authorization. The cardholder signed the check-in folio, and the couple went on to have a great weekend, running up additional charges, all of which were signed for by the wife.

Upon their departure, the couple used express checkout. And when the cardholder received his statement, he disputed the $1,400 charge.

The hotelier had a keyed transaction; no card imprint, no prompt or entry of cardholder verification value (CVV) on that keyed transaction; an illegible signature on the folio; and all subsequent charges signed for by the cardholder's wife. To add insult to injury, the cardholder could not be recognized on the check-in video because he never exposed his face, and his wife was never in the frame.

Two simple procedures would have made it easy for the hotel to refute the chargeback: taking an imprint of the card and providing a prompt for entry of the CVV. The hotel's one - yes one - electric imprinter had been broken for over a month, yet no one had alerted maintenance or the credit manager.

The card brand rule regarding imprinters and merchant identification plates has been the same for decades. To paraphrase, it states that the merchant shall provide a legible copy of the imprint of the card, when requested.

Merchant safeguards

Card company rules favor cardholders, so merchants must use every tool and resource at their disposal to protect their rights. This is even more crucial in tough economic times, when the rates of fraud - friendly and otherwise - increase.

A few CardWare clients have recently eliminated the embossed imprinter plate from their new merchant kits, believing it is no longer necessary; new clients are omitting both the imprinter and the merchant ID plate from their kits. This is a huge mistake.

In my opinion, merchants could hold processors liable for chargebacks due to lack of imprints if the processors failed to provide them with imprinters. I don't know many merchants who will pursue legal action over a few dollars, but they more surely will when transactions are substantial. Remember, it isn't what you, as the merchant level salesperson (MLS), believe is substantial, it is what your merchants deem substantial.

The reasoning and justification for an imprinter is the same today as it was five, 10 and 15 years ago: to prove the card was present during the transaction.

MLS protection

As an MLS, do not shortchange your sale by omitting an imprinter and merchant identification plate. At a minimum, ask merchants to show you their imprinters and order plates for them. At least for one moment in time, they will know where their imprinters are.

Also, as an MLS, don't allow your processor to expose itself and you to potential lawsuits because your merchants were not provided the tools required for their protection (remember what the card company rule says).

Would you omit sending a printer with the terminal to a new merchant? No. Would you forget to send the merchant a sticker with your company's authorization and support phone numbers? Of course not. Then why would you neglect to include an imprinter and embossed merchant identification plate? As notably stated elsewhere in The Green Sheet, it's about doing it right. Providing an imprinter is the right thing to do, the short-sightedness of others notwithstanding.

To quote Mark Twain, "The reports of my demise are greatly exaggerated." If imprinters could speak, this would be what they'd say. In no small way, they have become, once again, a critical tool for protecting both the integrity of transactions and the success of merchants. end of article

Biff Matthews is President of Thirteen Inc., the parent company of CardWare International, based in Heath, Ohio. He is one of 12 founding members of the Electronic Transactions Association, serving on its board, advisory board and committees. Call him at 740-522-2150, or e-mail him at biff@13-inc.com.

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