By Jeff Fortney
Clearent LLC
Recently, one of my credit cards was hacked. Luckily, I had set alerts, and the issuer also called to check on a couple of transactions. Although I take all the known steps to protect myself from card fraud, it isn't my first rodeo when it comes to fraudulent transactions. I have yet to lose money, but I have had to deal with the inconvenience of having a new card issued.
Sadly, I have to admit this is bound to happen to everyone sooner or later, especially as electronic payments and overall card usage continues to grow. Over the past few years, we have heard and read about many major breaches that have resulted in cards being reissued. As a result, card issuers have also started offering credit monitoring services and other forms of protection to help consumers safeguard their accounts and their assets.
Yet the demand for acceptance is still growing. Ask a millennial how much cash he or she has on hand at any time, and I bet the individual will say less than $20 (or in the case of my family, less than $5). Millennials use their cards for everything from their morning coffee to down payments on major purchases.
Merchants recognize this. They know that card acceptance is all but required if they want to grow and meet their customers' needs. As an industry, we've done a pretty good job of educating merchants on the benefits of card acceptance, but where we're lacking is in educating them on the risks. Chargebacks are part of that risk, and they create a variety of headaches for merchants.
I recently received a call that was similar to others I have received over the past year. A merchant level salesperson asked how I would answer this question from one of his merchants, "How can I guarantee that I will never have a chargeback?" This was an experienced agent, so his question surprised me. I asked him how he has answered this question in the past.
His response didn't surprise me because I have heard it all too often. He said he'd avoided the topic. Here's why.
Many of us fear that if we talk about potential losses, a merchant won't sign with us. So, we stay away from the topic unless the merchant brings it up. After all, the likelihood of a merchant experiencing a chargeback is very small, so why discuss "what ifs," right?
Although chargeback percentages are low, the best time to discuss data security and proper card acceptance is during the sales process. How you do this can build trust, and start the process of becoming the merchant's trusted adviser. It all begins by asking a few questions.
I don't expect that most merchants have taken any steps to avoid a breach. Some may say that they get a signed receipt, or even that they will only accept a card if it's swiped. Don't question or comment on the merchant's approach at this time. You're just gathering information at this point.
Again, the answer may be that the training is very basic. It may be as simple as swipe the card, do what the terminal says and get a signature. Some may go the extra step to ask for an ID and then match the signature against the back of the card.
Since chargebacks still represent a small percentage of sales, I wouldn't be surprised if merchants respond that they haven't had any. However, this does not mean that they won't experience chargebacks in the future.
After the merchant shares the answers, it's now time to follow up with a positioning statement. Here's an example: Based on our conversation, I think there's an opportunity for me to help relieve some of your current processing concerns. I also think it's important that I understand your current approach to data security. There are always steps I can suggest that will help you protect yourself against loss.
At this point, do not volunteer any of the steps merchants can take to protect themselves and their customers. Never "spill your candy," as I like to say. Instead, share a third-party story that demonstrates a compelling pitfall, such as a time when the staff wasn't properly trained and keyed transactions instead of swiping them. Make sure the consequences are the key to the story, and that they're relevant to the merchant.
Of course, some merchants will resist answering your questions or claim they haven't had any problems. In this instance, ask if they or anyone they know has had a situation arise where their card information was stolen. In many cases, this will lead to opportunities to discuss the emotions associated with breaches, both from consumer and merchant perspectives.
This should not be a negative conversation. It truly is an opportunity to address a topic that is too often avoided when addressing it should be integral to any merchant relationship. Having this conversation during the sale demonstrates your concern for the merchant, both now and into the future.
It's not fun when your card is hacked. It's even less fun when a merchant faces a chargeback. However, when you focus on being a trusted adviser, you can educate and prepare your merchants. Take the time to ask the questions, and after merchants sign with you, follow up with processes to help improve their security. The reward will come in the form of profitable, long-lasting relationships with your merchants.
Jeff Fortney is Vice President, ISO Channel Management with Clearent LLC. He has more than 17 years' experience in the payments industry. Contact him at jeff@clearent.com or 972-618-7340. To learn about how Clearent can help you grow faster and go further, visit www.clearent.com.
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