How could this business to business vendor error have been prevented? How could everyone have saved time? Let’s review what happened, the resolution, and the repercussions for all parties, both time and money.

SCENARIO:

• Business “A”, an equipment seller for business to business only,  issued a PO to a vendor, a wholesale distributor for the trade only.
• The vendor, “merchant”, created an invoice.
• The accounting department uses the invoice and pulls the credit card information to charge the card. Business A credit card information is on file with the merchant, sent via fax some years ago. Where is that information stored?
• The business asked that the equipment ship in 2 days, which is also when the card will be charged.

WHAT HAPPENED NEXT:

• Two days later, merchant called business A to report that the card declined.
• The Business reviews their credit card account online and does not see any pending transactions or any reason for a decline and calls back the vendor to report same.
• Vendor runs the card again, and again declines.
• Business calls the credit card issuer, pressing voice prompt keys, finally gets ‘press 3 now’ to be connected to an operator, and then is promptly disconnected. DON’T YOU HATE IT WHEN THAT HAPPENS?
• Business calls card company back and spends 5 minutes reviewing what they already checked online- the account is in good standing and there is a sufficient credit line.
• After further review, it’s determined there is a large charge from the vendor that is pending, but not yet funded. It would be 5-7 days to remove the hold if the transaction is disputed.
• Business does not want to dispute – this should be worked out with the vendor.
• Business calls back vendor, who realizes they made an error and had charged someone elses invoice to that account.
• Vendor issues a refund to the business for the difference between the original charge and the amount that is really owed. (Difference between actual invoice and some other customers invoice. )

REPERCUSSIONS:

• LOST TIME. How much time did everyone waste?  At least 15 minutes for each party. Both operations were disrupted.
• NO ACCESS TO FUNDS. The business does not have access to credit card funds availability until the refund goes through.
• EXTRA FEES. The merchant pays multiple transaction fees.

HOW THIS TRANSACTION COULD HAVE BEEN MORE EFFICIENT:

• ERROR FREE. The vendor could send the business an email confirmation the PO total is correct and the business self-pays via a secure online payment page.
• ERROR FREE AND SAVE TIME. The vendor could have used electronic bill payment and the business would click and pay the invoice.
• ERROR IDENTIFIED FASTER. The vendor could have sent a copy of the transaction receipt immediately. The business could recognize there was an issue and notify the vendor. The transaction could then be voided, or preferably a reverse authorization could have been requested, if their credit card processing vendor supports that transaction type.

HOW CENPOS PAYMENT WOULD HELP THIS MERCHANT:

EFFICIENCY

1. AUTOMATE TO SAVE MAXIMUM TIME FOR BOTH PARTIES AND ELIMINATE ERRORS. EBPP- CenPOS automatically email the invoice for payment. Business clicks the email link, chooses how they want to pay, and the merchant ships upon payment completion.
2. ERROR FREE, SAVE A LITTLE TIME. Merchant sends email with their invoice or other method to confirm bill amount owed. CenPOS Free online payment page and business would have self paid with their payment of choice.
3. ERRORS FOUND FASTER. Merchant could have key entered the transaction in the virtual terminal and emailed a receipt. The cardholder would have known instantly of the mistake.
4. SAVE TIME. Merchant could have securely stored payment data with the business saving keystrokes to process the transaction.

 HARD DOLLAR SAVINGS

• I know that this merchant uses a desktop terminal and a virtual terminal (authorize.net). Neither of those requires the user to enter data into fields that could qualify transactions for lower interchange rates. Additionally, neither of them support enhanced or “level III data”, required to qualify certain transactions for extra low purchasing card rates. Sending the right data could save a merchant up to almost 1%, a big deal when margins are tight.
• The merchant will pay auth fees for one sale, two declines and a refund, 3 more than they should have.

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Tags: authorize.net, card not present, CenPOS, credit card processing, tokenization, virtual terminal

This entry was posted on Friday, June 8th, 2012 at 9:07 am and is filed under merchant account Q&A. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.