When the system goes to collect the money for an authorized credit card transaction, it attempts to collect the order's balance due amount, regardless of the original authorized amount. Depending on the final order total, there are potential implications that could change your interchange rate qualification and could result in you losing charge back protection if the customer disputes the charge. Consider the example below to help avoid charge backs and declines when processing credit card transactions.
The following settings and regulations apply to this example:
The Credit Card Collection Approval Mode control maintenance record is set to Freight Posting.
The VISA operating regulations provide a 15% tolerance in the completion amount from the initial authorization. Other credit card brands, or your merchant service provided may have differing rules for processing authorized transactions. This example deals specifically with VISA's tolerance rules.
Your counter salesperson enters an order and authorizes the customer's credit card For $100. When Starship processes the order, the freight is calculated at $30. The system attempts to collect the entire order total of $130. The $30 freight charge exceeds the VISA 15% tolerance regulation. In this case, any of the following could happen:
The card's issuing bank might choose to decline the transaction.
VISA re-categorizes the transaction to a higher interchange rate.
If the customer disputes the charge, you are likely to lose the dispute because the initial authorization was not obtained for the extra $30.
There are several ways to handle this scenario:
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Add an upcharge to the ship via in Ship Via Maintenance |
Adding a percent or minimum upcharge amount to the ship via includes the additional amount in the initial order authorization. If the ship via on the order in this example had a $20 minimum upcharge amount, the initial authorization on the order would have been for $120. The completion amount of $130 would have been within the 15% tolerance, thus qualifying the transaction for optimal interchange rates and only charging the customer's card once. |
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Create another payment on the order for the $30 freight charge |
In Sales Order Entry, prior to the ship confirmation from Starship, complete the initial authorization for $100, and create a separate payment on the order for the additional $30 to cover the freight charges. This results in two charges on the customer's credit card statement: one for the $100 for the order, one for $30 for freight. |
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Complete a separate sale transaction |
In Sales Order Entry, complete a sale transaction for the $100 and allow the system to complete the authorization for $30 when it receives the ship confirmation from Starship. This results in two charges on the customer's credit card statement: one for the $100 for the order, one for $30 for freight. |
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Let the initial authorization lapse |
In Sales Order Entry, complete a separate sale transaction for $130 to cover the entire amount of the order and let the initial authorization lapse. This holds the funds on the customer's card in addition to the original amount of the order. |