In the simplest terms, a chargeback is the reversal of a credit card payment directly from the issuing back. Basically, it’s a refund that you as the merchant didn’t initiate and is typically as a result of a dispute between the merchant and the customer who purchased goods or services with their credit card.

Chargeback System: Intent vs. Practice

Chargebacks were initially invented to help protect consumers from dishonest merchants. Bank credit card usage exploded in 1974 when the Fair Credit Billing Act of 1974 was enacted. It’s no surprise that the hero of the act and subsequent increase in credit card usage was the chargeback.

In all cases except fraud, the customer is required to attempt reconciliation with the merchant first.

Sadly, this isn’t always the case and some consumers have learned how to utilize the chargeback as a weapon to victimize merchants via “Friendly Fraud”.

Friendly Fraud – On the Rise

Friendly Fraud, aptly referred to as Chargeback Fraud, is when a consumer abuses the chargeback process. They purchase goods and services using their bank credit card, and then claim those legitimate purchases are fraudulent.

While the chargeback was a very important tool in creating consumer comfort in utilizing credit card payments, related legislation hasn’t kept up with the changing payment landscape.

There are dozens of good options for receipt paper. Here are a few of the best:

• Amazon
  Has thermal receipt paper for credit card processing terminals as well as thermal receipt paper for your POS printers and the two-ply yellow and white paper for your kitchen impact printer.
• Food Suppliers
  If you purchase product from food distributors like US Foods, PFG, Sysco, etc. they almost always stock thermal and impact paper rolls and it comes on the same trucks as your food supplies.
• In a Pinch
  If you need paper “yesterday” then local office supply stores will have it available for you.
• Sales Executive
  If you are in a real jam, often your KB Sales Executive will have some rolls on hand. It’s worth a shot.

Interchange refers to the underlying cost of a credit card sale.

That is the simple definition.

Typically, when people say “interchange” (as in “interchange plus pricing”) they’re referring to a combination of different costs, namely:

• Bank interchange
• Card Brand Assessments
• Network Fees

The bank that issues a credit card, depending on its type (rewards, debit, business, etc.) will have an interchange rate that goes with it. Each card may have several different costs associated with it based on the size of the transaction, method of acceptance, merchant MCC code, and settlement timing.

Here are some common Card Brand fees that get included when “interchange plus pricing” is used:

• Assessments
• Network Fees
• Cross-Border or Foreign card fees
• MasterCard Network Access and Brand Usage Fees (NABU)
• Visa Acquirer Network Fee (FANF)
• Visa Transaction Integrity Fee (TIF)
• Visa Authorization Misuse Fee
• Visa Zero Floor Limit Fee
• America Express Card Not Present Surcharge

Tips are adjustments to transactions taking place at the time of transaction (in-line) or after the transaction is initially authorized (post-authorization). In either case it is very important that you adjust any tips before you batch out. Once you batch out (or settle), you are unable to make adjustments to those authorizations.

Because transactions cannot be adjusted after they are settled, in order to process those missing tips, you will need to run new transactions for the tipped amount. If you do not have the ability to get the full card number and expiration date from your customer, you will need to get it from your host.

Adding Tips to Batched Out (Settled) Transactions

1. Obtain the full card number from the host plus the expiration date and transaction amount
2. Review your signed customer slips to match the transaction amount, last four, and the desired tip amount
3. Complete a manual sale for each missing tip
4. Settle batch

Power Tip:

Any time you run a transaction after the original sale date, you run the risk of a chargeback. If at all possible maintain excellent communication with your customers so they understand the charge. Posting to Facebook or other social channels, utilizing an email list, or putting a temporary banner up on your website are good ways to notify your customers.

No, signatures are no longer required on credit card transactions.

As of April, 2018 the major card brand networks eliminated the requirement for merchants to have a signature on payment slips. The card brands (Visa, MasterCard, American Express, and Discover) found that a signature was not a very effective way to prove identity. Couple that with the advances in payment technology, merchants no longer have to get a customer signature.

If you are not accepting EMV, Visa does still require that you get a customer signature.

Pro Tip:

If you are a restaurant and are doing post-authorization tips, it is suggested to get that optional signature anyways. It’s a just-in-case measure to protect you from chargebacks.

References:

• Visa Announcement – 04/14/2018
• MasterCard Announcement – 10/18/2018
• American Express Announcement – 12/11/2017 
  Link is to FAQs related to the change. Details of the requirement are in the American Express Operating Agreement
• Discover Announcement – 12/06/2017

NFC stands for Near Field Communication. NFC payment is a method of wireless data transfer that allows smart devices to share data when they are in close physical proximity. NFC is what powers contactless payments from mobile wallets like Apple Pay, Android Pay, and contactless smart credit cards.

Think of it like RFID chips, but with a much tighter range – just 4 inches or so.

Unlike Bluetooth, which requires devices to sync to each other and pair, NFC does not require discovery – just proximity.