An authorized payment is a credit card, debit card, or ACH payment received by a merchant with express authority of the card or bank account holder. Obtaining debtor payment authorization plays an essential role in the electronic payment process. If you are a high-risk merchant, such as a debt collection agency, make sure all proper and required payment authorization is on file. Why? Read on to learn more!!
Reduce Fraud and Chargebacks
Whether a single or recurring payment, make it standard policy to keep a completed payment authorization form on file for all accounts. Signed by the cardholder, this form outlines the payment or payments agreed to within a specific timeframe. A payment authorization form is specific to the payment type used, so make sure to keep one on file for each unique payment type received.
This form is invaluable when it comes to establishing your validity as a merchant to assess a debit against a card or bank account. Unfortunately, many debtors have 2nd thoughts when it comes to paying a debt. Often times they contact their financial institution to flag the payment transaction as fraud. As you are well aware, keeping chargebacks low is imperative to maintaining a merchant account without reserves or restrictions. You also know as a high-risk merchant your business is easily targeted for unnecessary chargebacks. With a payment authorization form on file, your agency has irrefutable proof the payment was submitted with the debtor’s content.
Eliminate Human Errors
Mistakes are, well, human! We’ve all accidentally transposed a number or entered in a wrong dollar amount. With a payment authorization form on file, a professional collection agent can re-confirm the card or checking account number prior to submitting a payment for approval. This decreases customer frustration when things go unexpectedly wrong, such as an erroneous decline is received. During this review, they can also confirm the payment amount and date to be processed. Remember any payment outside of the specified date on the authorization will require a new form be completed and kept on file.
The payment authorization form is also a great tool to ensure your debtor database is up to date. Most forms require the payor to input their personal details in addition to the payment method. This includes current address and contact phone number. By confirming the most recent data is on file in your client software or debtor records, you substantially reduce your employees’ workload.
It’s Not an Option
The overwhelming majority of debt collection agencies accept payments electronically. Meaning they do not physically swipe a payment card. Financial information is entered online and sent off for processing. If you wish to remain in compliance with electronic payment regulators such as the ACH network and PCI-DSS, then it is imperative you obtain the debtor’s authorization. Failure to do severely hinders your ability to accept electronic payments in the long run.
Types of Payment Authorization
We’ve outlined the recommendations for a written payment authorization already. Barebones data should include:
- Dollar amount of the debit
- Date of the charge(s)
- Verification of the debtor’s name/account number
- Confirmation of the payment method processed
- If credit/debit – card number, expiration date AND card verification value (3-4 digit unique card code)
- If ACH – bank account number and routing number
- Agency details including hours of operation and contact information
- Information explaining how a payment can be canceled
This form is valid with a wet or electronic signature. If obtaining an ‘e-signature’ be sure to review the E Sign Act to ensure your process is in compliance. Your agency can also employ a voice recording or web payment authorization process if written is too cumbersome. Obtain and disclose the same information. Be sure to review your plan with your compliance team to ensure it meets all current laws and regulations.
Although the process may seem cumbersome, as a debt collection merchant it is imperative to understand the details of the requirement. Be mindful and meticulous when forming your payment authorization procedure. In doing so, you not only increase your payment partner’s trust, but also increase debtor satisfaction. If your agency is searching for a compliant, affordable, and scalable payment solution – reach out to Payment Savvy! We are always on hand to create the perfect payment package for you!