What can you do to help ensure your payments are getting processed, your cashflow is steady, and your merchant fees are lower? We’ve got a few tips for you:
Automated payments with retry logic. When you need to break up a payment into several smaller payments, or set up a subscription, use automated recurring payments to take care of the payments for you. By breaking down your accounts receiveable into manageable chunks for the payee, you’re more likely to collect the money that’s owed you. Recurring payments can automate the collection of outstanding debt and improve your cash flow. Tips for success with recurring payments:
- Watch your account for declined recurring payments. Recurring payments typically retry if a decline occurs, which is a good thing, but it can cost extra transaction fees if you don’t stay on top of it. Determine how many retries you want to allow, then contact the customer to see if they changed their credit card number or the expiration date changed. If so, make the change to the recurring payment immediately to avoid additional declines. If not, ask for a new form of payment. Depending on your payment processor, you may need to cancel the current recurring schedule and set up a new one.
- If you choose to employ recurring payments and your payment provider offers an account updater service (which updates credit card numbers and/or expiration dates with information from the issuing banks), you may want to consider subscribing to that service to reduce the number of declines.
- Reduce your overhead: minimize transaction downgrades. Use all the tools available to you to reduce transaction downgrades. When your transaction downgrades, you are charged a higher discount rate, which is a percentage of your transaction volume, and it can make a big difference in your merchant fees.
- Retail payments should be swiped cards as much as possible, only keying in card numbers when absolutely necessary. Also, collecting the customer’s zip code and using the address verification service (AVS) can sometimes help reduce fees.
- When processing mail or telephone order or e-commerce payments, take advantage of AVS and the card code. There is typically a cost for AVS, but the cost of the service is usually much less than what you’d pay in extra fees for downgraded transactions.
- Capture funds quickly. If you’re using two-part payments where you first authorize the amount, then later go and capture the funds after you’ve shipped the goods, make sure you don’t wait too long. An authorization checks for funds on the card and reserves the funds for you, but it expires over time and the amount available on the card changes as the customer uses their card. If it’s been more than two days, re-run the authorization before you capture the funds.
- Choose a reliable payments provider with backup data center. Know what to do if payment processing is unavailable.
- Challenge chargebacks. Chargebacks are costly, so if you can prove you did provide the product/service and made efforts to satisfy the customer, you can avoid having to pay for the cost of the order plus the chargeback fees.
- Know the credit card processing rules. Not knowing the rules is a good way to inadvertently break some, which can cost you in processing fees and may even jeapordize your merchant account. All the major card associations post their merchant processing regulations: Visa®, MasterCard®, American Express®, Discover®.
Also, see this article on Credit Card Best Practices from Shift4 for more good tips on things to do to manage your payments smarter.
And since you’re being smart about managing payments, get yourself an intelligent payment solutions provider as well! Apply now for a free, no-obligation quote from ApprovedPayments.
