Credit Card Processing Tips and Insights From Chosen Payments

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Chosen Payments, a national credit card processing company, offers member booksellers exclusive, low rates as part of ABA’s affinity partnership program. Here, Chosen Payments provides critical information across a range of topics, including payment gateways, accepting credit cards by phone, and monitoring chargebacks.

Visit to learn more about ABA’s affinity partnership program, which features vendors that offer discounted products, services, and business opportunities.

What exactly is a payment gateway?

You have probably heard the term “payment gateway” many times. As a merchant, you know that you need one and that you have one. Maybe you even know the name of your gateway, such as or PayPro Flow. But what exactly does the gateway do for you?

If you want to process credit cards, then you need a payment gateway. A payment gateway is the merchant service that authorizes credit cards and other direct payments. Payment gateways enable customer payment transactions by transferring information between a payment portal and the front-end processors. Payment portals can include websites, mobile phones, terminals, software, or even interactive voice response services. Consider the “payment portal” to be the place where you enter the credit card number to begin the transaction. This can include manual entry, swipes, chip reading, or even telephone keypad entry.

The payment gateway has many tasks to complete to process the transaction:

  1. The customer provides their credit card for payment and at the moment of entry (swipe, chip read, manually keyed) the data is encrypted.
  2. Your credit card processor then receives the encrypted data through the gateway as they are processing the transaction.
  3. The processor then sends the transaction data to the credit card issuing bank, which has control of the credit card’s credit limit and current account standing, such as past due, expired, or cancelled.
  4. The transaction is then approved or denied.
  5. If the transaction is authorized, the issuing bank sends the authorization back to the entry point, such as the terminal or a website shopping cart. This is when you receive an approval code.

The above process takes place in a matter of seconds and the funds are available to the merchant usually within 24 to 48 hours. Make sure you choose a credit card processor like Chosen Payments that can provide you with secure, innovative, and affordable credit card processing methods.

Accepting Credit Card Numbers by Phone

Accepting credit cards by phone is risky business to begin with. Almost all fraud involves taking a credit card by phone. Unfortunately, accepting credit cards over the phone is a common practice, so we must recognize the risks associated from your point as a vendor as well as the risk to your customer.

Safety First

Fraud isn’t the only risk from a phone order. Never accept a credit card from someone when you know they are driving a vehicle. Ask them to call you back when they are no longer driving. The crunch of metal is an awful sound that more than one merchant has reported hearing while accepting a credit card by phone.

Who’s Listening

Customers calling in orders from busy airports, restaurants, and other public places may be overheard giving all the details a thief needs to use that card in the future. Remind your clients of that fact if the background sounds noisy. Get creative if you need to and lead the call by asking the customer to read the last four digits of the card, then get their phone number. Next ask for the billing address followed by the first numbers of the card. This is the equivalent of scrambling the numbers. It can’t eliminate someone listening from getting the information but it is certainly better than blurting out the entire credit card number for the world to hear.

Always Use AVS

When you process a credit card taken over the phone, always use the Address Verification System (AVS). If you get a mismatch, you should assume this is credit card fraud and you should begin to take every precaution before service or merchandise is rendered. Call your customer back and verify their billing address. If necessary, call your merchant services hotline and tell them you have a “Code 10” situation. This will start the ball rolling with the issuing bank to contact their cardholder and verify the transaction. Better safe than sorry.

Why You Should Monitor Your Chargebacks

Chargebacks happen from time to time due to misunderstandings, disappointment in service or goods received, unauthorized use of a card, and, of course, fraud. Having too many chargebacks can cause a merchant to have a negative rating in the credit card processing space, indicating shoddy business practices when accepting a card.

If you are like most merchants, you probably just deal with each chargeback as it presents itself and once the data has been provided to the credit card issuer, you cross your fingers and hope for the best. Some of you may not even go back to check and see if you successfully won your money back but rather assume you lost and get back to work rather than fret about it.

Consider creating a chargeback reporting system. This is a log of all chargebacks containing valuable data that when analyzed over a period of time will allow you to see what types of chargeback claims you are receiving and identify trends of bad employees or weaknesses in accepting a card without proper verification.

Recording the Number of Transactions

How much data you track is up to you, but the more you track the better your statistics will be at the end of a year. Even if you have no chargebacks in a single month, you should record the number of transactions you had by card type, such as Visa or American Express. This data will allow you to do two things: The first is to identify what card type your clients are most likely to present and the second is to allow you to calculate the number of chargebacks per group of transactions.

Develop a Chargeback Coding System

Enter every chargeback into a running log with information about the date of the chargeback, the amount, the client name, and all employees associated with this transaction. This may identify some internal issues down the road. Next, assign a unique code for the reason you suspect this chargeback was initiated, such as fraud, additional charges dispute, or any other reason. This information can help you determine if you keep making the same mistakes over and over.

Submission Reporting

Once you have received a chargeback notice, enter notes about your response, such as what you have submitted to support your claim that you are entitled to the money. This might include notes like:

08/15/18 – Sent proof of signature

08/18/18 – Sent copy of contract (Order465798.pdf) to

Enter a note of where the supporting documentation that was sent has been stored, whether electronically or in a filing cabinet. This allows you to refer back to it as the chargeback process continues.


Win, lose, or draw, make sure that each entry in the chargeback log is followed through to the end. Mark whether you won or lost and save a copy of any correspondence used to make the closing entry and where it will be filed in case of a need for future reference. Just because a customer doesn’t win a chargeback doesn’t preclude them from taking you to small claims court. Should that happen, it is likely to be months before you actually get to a courtroom, and your log should direct you to every document you need to present your case again and prevail again.

For further information or assistance handling a chargeback, visit Chosen Payments online or contact Chosen Payments Marketing Manager Jim Luff.