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Is your high-risk business struggling to maintain a low chargeback percentage? Reviewing your payment authorization form procedure can help locate loopholes in your current process that may be contributing to the problem. Payment authorization forms, regardless of your payment platform, is essential to maintain with your customers. Consider this form your ‘Golden Ticket’ to use in dispute situations. But what items are essential to convey, and how does it reduce your merchant risk? Read on to become a payment authorization form pro!
What is a Payment Authorization Form?
In any scenario where a card-not-present (CNP) payment transaction initiates, an agreement between the cardholder and your business for the product or service provided is paramount. Typical CNP payments occur over the phone, online, or still via snail mail in some instances. Having a payment authorization form process for these transactions helps confirm and verify the payment details agreed upon with your customer. It certainly establishes validity when assessing debits against a particular card or bank account.
In short, it is a financial agreement between your business and your consumer. It is signed by the authorized account holder and grants merchant permission to charge a specific dollar amount to the payment method for concrete for a period of time. It can be used in both one-time and recurring payment transactions.
The details confirmed within the document vary among businesses as needs differ, but standard items generally include:
- Agreement Date
- Merchant’s Address and Contact Information (Customer Service Phone Numbers and Email Addresses)
- Customer’s Billing Address on File with the Payment Method
- Language Authorizing Your Business to Charge the Payment Method on File
- Instructions on how a Customer can Alter a Payment
- The Account Holder’s Payment Information
- Name on Card or Checking/Saving Account
- If Credit/Debit – Card Type, Card Number, Expiration Date, and CVV Code (if One-Time Payment)
- If Checking/Savings Account – Account and Routing Numbers, Check Numbers (if Applicable)
- Signature and Name of Account Holder
Advantages of a Payment Authorization Form
We now know what a payment authorization form is and the crucial items to convey on this document. But what are the real-life advantages of having one on file?
Minimize Fraud and Chargebacks
We’ve learned a payment authorization form confirms the authenticity of the purchase and serves as verification of the transaction in the event of a customer dispute. Unfortunately, some customers have second thoughts on purchases of goods or services and don’t want to pay for them. As a result, a customer requests their financial institution to mark a payment as fraud or unauthorized, and a chargeback initiates against your business. This debits the funds for your bank account without prior warning or your authorization. The health of your merchant account, in turn, suffers, and it is a frustrating scenario to deal with when your company is not in the wrong.
In cases where a dispute arises, the burden of proving payment was authorized falls to you as the merchant. Providing the authorization form to the bank confirms serves as proof payment was submitted with the customer’s consent. This, in turn, assists the process of reversing the chargeback, so it doesn’t count negatively towards your business.
Human error is inevitable – mistakes happen all the time. It is not uncommon in a CNP payment environment to key in the payment digits incorrectly or transposes a number. Certainly, with your trusty payment authorization form on file, you can easily confirm the details without creating a frustrating experience for the customer should you receive a payment error.
Establish Positive Merchant Reputation
If operating in a high-risk industry, you most likely are subject to many restrictions and must adhere to specific guidelines. This encompasses the requirements you need to maintain with your merchant bank. Falling outside of the rules established can leave you without the ability to process an electronic payment. This can quickly create a negative situation for your business…fast. Establishing a payment authorization form process proves to your processor you take the responsibility to accept a payment seriously and are doing your part to reduce the risk of fraudulent transactions occurring. Having a good reputation with your payment processor can, in turn, lead to lower processing rates or a higher monthly volume when requested.
To conclude, accepting CNP payments comes with risk – no matter how you look at the scenario. The payment authorization is one tool available to your business to ensure you are receiving valid payments. But it is just one tool – there are many options available to reduce your merchant risk. Looking to learn more? Reach out to Payment Savvy today to discuss how we provide secure, reliable, and innovative payment solutions to a wide array of high-risk merchants.
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