Four Common Myths about Credit Card Processing

Published November 6th, 2017 by Servistree

A survey by the Federal Reserve Bank of Boston says that 167 million American adults have at least one credit card. What’s interesting is how that breaks down – and how it’s changing.

Figures from credit bureau Experian say that baby boomers have an average of 2.66 credit cards each while millennials have only 1.57. The difference probably has something to do with the fact that the credit card first became popular when the oldest baby boomers were in their early teens.

Myths about the Processing of Credit Cards

Cards have been around long enough that some interesting myths have grown up around them. Taking away the fiction and focusing on what’s real will help merchants get the best out of the system.

MYTH 1:  I’m a merchant; my job is to sell things. Security is the bank’s problem

The story: Whoever looks after your credit card processing also takes care of security, so you don’t have to worry about it.

The facts: That’s a very dangerous approach to take. It was before and it is even more now that EMV is with us. EMV stands for Europay, MasterCard, Visa, the companies that created the chip and pin standard for credit and debit cards. The microchip provides cards with a new level of security, but the responsibility for checking it lies with the merchant.

The reality: Take security seriously. It isn’t something you can leave to the banks.

MYTH 2:  I have to leave processing with my bank because no one else can give me a good rate

The story: Only the merchant’s own bank will offer competitive rates for card processing.

The facts: In fact, it’s unlikely that your bank does its own processing. Most banks subcontract that service to specialist processing companies and there’s nothing to prevent the merchant approaching those companies direct – and nor is there anything to prevent the processing company offering the merchant a good deal.

The reality: Shop around. You won’t know what the best deal you can get is until you ask.

MYTH 3:  There’s nothing you can do about chargebacks – they’re a fact of life and that’s that

The story: Every merchant is hit by chargebacks and, although a number of them are fraudulent, there is nothing to be done about it.

The facts: This really isn’t so. Yes, there’s no question that from time to time you’re going to deal with some shameless person who has no conscience at all, but chargebacks can be minimized. If you’re in a business where your product is used quickly, you’ll probably get a better rate from the processing company and that’s because they know you’ll have fewer chargebacks. Even if that isn’t true of your line of business, you can still cut chargebacks to a minimum by making sure that your prices and charges are not exorbitant and by checking the identity of the buyer (chip and pin helps but it isn’t foolproof).

The reality: Identify your customer and don’t invite chargebacks by pricing way above the competition.

MYTH 4: I don’t have to worry about PCI compliance because I’m not big enough and I don’t have enough transactions

The story: PCI is the Payment Card Industry Data Security Standard and it doesn’t apply until you reach a certain size and/or have enough transactions.

The facts: This is a dangerous myth and it can get you into trouble. There’s no minimum size you have to be before you need to worry about PCI compliance, and nor is there a minimum number of transactions – if you only accept one card a year, you’re still covered.

The reality: The PCI Standard exists to reduce credit card fraud and compliance is checked annually. Make sure you understand what is required of your business.

Managing the way you handle credit and debit cards can decide whether you stay in business. ServisTree is here to help. Visit or call us at 866-944-3244.  We are looking forward to hearing from you!



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