Fraud transactions rank among the most prominent threats in the credit card industry. The U.S. even loses around 7 cents to credit card fraud for every $100 of gross sales per annum. Processors avoid merchants prone to chargebacks for this reason. Luckily, business owners can mitigate the risk of credit card fraud by equipping their POS systems with pre-authorization.
As a merchant, you can send pre-authorizations to card-issuing banks and ask them to withdraw authorized amounts from your customer’s card post-transaction. This system prevents refunds and chargebacks. Most third-party and direct processors like Stripe, Paypal, Square, Stax, and JPMorgan Chase accommodate pre-authorizations.
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Many first-timer merchants hesitate to use pre-authorization because they worry that it requires strict screening, but it doesn’t. You can get payments pre-authorized in three easy steps:
We encourage all online and brick-and-mortar shops to look into pre-authorization. With the number of credit card fraud cases increasing, your business would substantially benefit from anti-fraud and chargeback systems. Always strive to mitigate security risks when processing card payments.
Also, don’t shy from consulting your payment processor about pre-authorizations. Credit card fraud and chargebacks hurt their businesses just as much, so it would also be in their best interest to protect your transactions.Â
Should your business invest in an online payment processing system? Let Processing Card help you decide! Check out our piece on how SMBs can benefit from online payment processors.
Florence Carpenter is passionate about ensuring that the process of opening merchant accounts is as straightforward as possible. She graduated from the University of Michigan with a bachelor’s degree in Marketing.
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