Creek Financial Services » Equipment

A fast fix for most AVS problems

Neil Moncrief — Tue, 30 Jun 2009 17:01:32 +0000

For years, I’ve been a supporter of the Address Verification Service (AVS), especially when it comes to e-commerce. I’ve seen it protect merchants from thousands of dollars in loses. As a former e-commerce business owner myself (co-owner of 2BigFeet.com), I used it to identify and prevent countless fraudulent orders that would have otherwise resulted in chargebacks. But too often, I hear stories from business owners about a time when AVS flagged an order from a “good customer.” As a result, some merchants have lost faith in the system and have abandoned it altogether. Just because of one or two bad experiences, these merchants willingly risk accepting bogus orders (and certain chargebacks) rather than risk angering good customers with false positives.

Most e-commerce businesses use AVS to reject fraudulent orders before they ever reach your fulfillment department, so you typically won’t know how many were blocked. And, since criminals don’t usually call and complain about their rejected orders, the false positives receive a disproportionate amount of attention. That being said, I’ll agree that AVS is not perfect. But many of the problems that legitimate customers experience are the fault of card issuing banks, not the AVS system itself. If you’ll follow the steps outlined in this post, you can reduce your false positives to a manageable number and benefit from the added security AVS offers.

If your customer’s order is rejected, she’s already going to be disappointed. First, and foremost, don’t allow your shopping cart to make the situation worse! The goal here is to have the affected customer call your customer service number immediately. Some carts use default messages that were obviously written by cold-hearted programmers, not warm-hearted customer service professionals. If you don’t know what message your rejected customers are seeing, put yourself in their shoes. Place a test order using a bad address. If the resulting message could make customers feel at fault or ignorant, change it. Avoid words like “mistake.” (Men, if you’re not the warm, fuzzy type, get a woman to help you.) Make sure your customers believe you really want to help fix this minor issue, or they’ll leave without giving you the chance.
Often, the customer will have already called the card issuing bank prior to calling you. If the bank told the customer the charge was approved (indirectly placing the blame on you), the customer may already be irritated when you answer the phone. You should understand, and be prepared to explain, that all orders must be approved by both the card issuing bank and the payment gateway. Since the bank only verifies the customer’s available credit, it will approve most orders. But your gateway checks addresses using the AVS system. And if the gateway is not satisfied with the AVS results, it will deny the order (even if the bank has already approved it.)
When the customer calls, apologize for the inconvenience. Explain that the problem could be the result of a bank error. Assure her that you’ll do everything possible to get the order approved. Finally, ask the customer if she has changed addresses within the past five years. Although this may sound like a strange question, it is very important. If the customer ever received her credit card statements at another address, regardless of how long it’s been, ask for that address. Beg for it, if necessary, even if she assures you that she’s shopped elsewhere using her new billing address. (Due to different merchants, different payment gateways, and different AVS thresholds, your business could refuse an order that another business might have approved.)
Try the order again, using the old billing address in place of the newer address. For reasons I don’t completely understand, inserting the old address corrects the problem about 75% of the time. It’s my theory that some banks’ computers use one set of address fields for mailing monthly statements and another set of fields for AVS. I suppose that when customers move and notify their card issuing banks, the banks may update the fields used for statements and forget to update the AVS fields. I haven’t been able to confirm this, but it makes sense. Using this approach, I’ve seen orders approved using addresses that were 5 years out-of-date!
If this doesn’t work, you should apologize and ask the customer to try another credit card. If the customer doesn’t have another card, you’ll have to choose to either a) disable AVS long enough to force the order through, or b) turn the customer away. In my seven years of e-commerce management, during which we approved tens of thousands of orders, I could count on one hand the number of times I had to make this choice.

Hopefully, this procedure will help you get more out of the Address Verification System. Keep in mind, though, that AVS does have other limitations. AVS usually will not verify customers with billing addresses outside the U.S. And if your customer is using a card issuing bank located outside the U.S., AVS may experience problems there, as well. Otherwise, you should be able to count on the AVS system to work nearly 100% of the time.

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Guard your business against reloaded credit cards

Neil Moncrief — Tue, 02 Jun 2009 23:22:18 +0000

With the abundance of stolen credit card data, it had to happen sooner or later… The thugs who purchase these numbers grew tired of only being able to use them online. They perfected a trick that allows them to use stolen CC numbers in respectable brick-and-mortar retail businesses. They only needed a source for stolen plastic credit cards and a magnetic strip writer. Now, they “reprogram” stolen cards by loading stolen CC data onto the magnetic strips on back, and Voila!, authentic-looking credit cards with no monthly payments required!

Now, many credit card processors program terminals to identify these cards before the bad guys can leave with your stuff. It’s simply a matter of comparing the account numbers on the front of the card to the information read from the magnetic strip on back. For every transaction, your terminal should prompt you to enter the last 4 digits from the face of the credit card. The terminal then compares that to the numbers it scanned from the back. If there’s no match, there’s trouble!

Like most security features, this requires merchants to spend a few seconds keying in information. When this feature first appeared, some of my merchants resisted because they “knew most of their customers” or because their businesses “don’t attract that kind of customer.” Several times, at the merchant’s request, I even disabled that feature. But since then, I’ve suggested that all merchants leave the extra layer of protection in place. In short, you don’t have to own a pool hall or a tattoo parlor to be subject to stolen cards. And if you can protect yourself by entering four numbers, I say “Just do it!”

If your CC processor uses this feature to help protect your business, you can breathe a little easier. Make sure your employees understand why it’s important. But if your processor doesn’t think this protection is necessary for your business, or if your terminal doesn’t offer this feature, please call me. I’ll be happy to examine your current practices and make suggestions how you can better safeguard your business.

Long live the knucklebuster!

Neil Moncrief — Tue, 31 Mar 2009 18:03:00 +0000

Are you old enough to remember knucklebusters? If not, let me explain. Before credit card terminals made instant authorizations possible, merchants used imprinters to make physical imprints of credit cards showing the amount and date of the sale, along with the store’s name and address. The customer would sign the copy, thereby proving the card had been physically present in the store.

The term “knucklebuster” referred to what could happen if a store employee wasn’t careful. Sliding the mechanism from side to side not only imprinted the raised card numbers onto the carbon paper receipt, it was loud and potentially dangerous. But the result was worth the risk, and may still be today. With the raised numbers of the credit card physically imprinted onto the receipt, the cardholder couldn’t dispute that the card had been physically present in that particular store.

Today, imprinters have gone the way of the dinosaur. Modern credit card terminals read the magnetic strip on the back of cards, and that serves as undisputable proof (in the eyes of Visa/MasterCard/Discover) that a card was used at a particular location. But we all know that magnetic strips can lose their magnetism over time. When that happens, you (the merchant) simply hand-key the credit card information into the terminal. But what if the customer denies having ever been in your store? What then? Without proof, you will lose the chargeback every single time! Yes, you read that right. You will lose every chargeback, unless you have a knucklebuster to use as backup. And in case you’re wondering, no, a photocopy of a credit card is not just as good as a physical impression.

It may seem like overkill, but a physical imprint of a credit card can mean the different between losing a chargeback and winning it. And if the charge was a large dollar amount (let’s say you sold a set of dining room furniture or a new riding lawnmower), the knucklebuster will be worth its weight in cash!

Whenever I sign up new retail merchants, I always remind them to use their imprinter as backup for all hand-keyed transactions. Orion Payment Systems, the processor I represent, sends every new merchant a customized imprinter name plate. And if a merchant doesn’t have an imprinter, I can provide one for just a few dollars. Did your current processor take the time to warn you about this topic? If not, why?

If you’re happy with the service you’re currently getting from your credit card processor, that’s great! But if your processor isn’t living up to your expectations, I’d appreciate the opportunity to show you what you’ve been missing. Feel free to give me a call.

Taking credit cards on the go

Neil Moncrief — Tue, 24 Mar 2009 15:59:49 +0000

Lately, I’ve gotten a lot of requests from retail merchants who need to accept credit cards, but they don’t have traditional retail locations. Several were salespeople who needed to take orders (and payments) while traveling. A couple were contractors who wanted the ability to swipe customers’ cards on job sites (so they could get lower discount rates), but they also wanted a system that could perform double duty in their retail locations, too. One call was from a man who sells products at county fairs up and down the West Coast. The most unusual may have been the youth minister in Oklahoma whose church operates roadside fireworks stands. They wanted to accept credit cards at six locations. But because their fireworks stands are only open 2-3 months out of the year, they needed to avoid the cost of buying terminals.

I had the same solution for all of them – StarCharge from Orion Payment Systems. Unlike other processors who may require a merchant to purchase an expensive terminal before processing credit cards, this ingenious program by Orion utilizes equipment that most business owners have already – a laptop computer. If you attach a USB card reader (optional, available for about $50 online), the laptop will have the same functionality as expensive credit card terminals, without the limitations caused by telephone or network wires.

StarCharge allows mobile merchants to do business on their terms. When a merchant chooses to add a USB card reader, his swiped transactions qualify for the best “qualified” rates without requiring a phone line. Since the software works on any computer (including a laptop), the merchant is free to accept credit cards at his customers’ locations. He only needs an Internet connection to get instant, real-time authorizations. Most merchants connect wirelessly via Wi-Fi or a wireless Internet card (available through their cellular provider), but a wired connection works fine, too.

The service technicians at Orion will walk you through the process of installing StarCharge on your computer(s), both the in-store PC and/or laptop. In fact, they are happy to help install StarCharge on multiple computers at no extra charge. This means you can arm each of your sales reps with StarCharge, enabling them to accept payments on-the-spot and without paying expensive downgrades. And obtaining real-time authorizations gives you the confidence to know you’ll get paid. Never again will you return to the office to process stored transactions, only to find that a customer paid you with a card that was no good.

You might expect to pay a lot for all the benefits offered by StarCharge, but you’d be wrong. In fact, you get everything I’ve described for less than half the price of a traditional credit card terminal! Here’s the breakdown:

$50.00 to purchase the StarCharge software
$25 for activation and training (no extra charge for multiple computers)
$5/month (in addition to your regular monthly statement fee)
$.03/transaction (in addition to your regular transaction fee.)

Why I won’t buy used terminals (and you shouldn’t either)

Neil Moncrief — Tue, 24 Feb 2009 09:19:56 +0000

Several years ago, I decided to experiment with buying used terminals on eBay. At the time, new terminals cost much more than today’s prices. I needed an option to offer merchants who didn’t want to pay for a brand new terminal, but didn’t want to enter a long-term lease, either. (For the record, I oppose leasing. It always cost too much, in the long run.) My plan was to buy used terminals at auction prices, verify they worked, thoroughly clean them, then re-sale them as “refurbs.”

I had no trouble finding used terminals on eBay. Many of them claimed to be from store owners going out of business. The majority, however, were listed by eBay stores and other sellers who specialized in electronics. Some were even listed by salvage companies who described them as unclaimed merchandise. I selected 30-40 terminals in “good condition” that I was willing to buy at the right price, and I entered my bids using AuctionSniper.com. Within a week or two, I had purchased and received about fifteen terminals.

Maybe five or six arrived in good condition, with all parts included. These required only minor cleaning before I shipped them to clients. Of the remaining terminals, a few were missing power cords and/or modems, which I replaced at additional cost to me. Several others had minor damage, but were repairable using parts salvaged from the last group. The last group, as you’ve probably guessed, were all D.O.A. These four were good for nothing more than spare parts.

Another problem you’ll experience with used terminals is the inability to accept PIN-based debits. The credit card companies require that advanced encryption software be installed in terminals before they can accept PIN numbers. Since each credit card processor installs software specifically written to work with their network, it’s unlikely that any used terminal will be ready for PIN-based debits upon arrival. This software can be added, but it will require additional shipping and encryption charges.

I was able to repair and sell most of those refurbished terminals I bought on eBay. But considering the time and money I invested, and my losses on the four still sitting in my boneyard, I probably just broke even. The good news is that I’ve since found a new supplier with much better pricing. Now, I’m able to sell brand new terminals for the price of refurbs, so there’s no reason for my clients to take chances buying used.

If you’re in the market for a new terminal, let me suggest one of the Omni series by Verifone. They’re affordable, intuitive, and they’ll last for years. And if your processor wants to charge you an arm and a leg for it, let me suggest you find a new processor.