Due to the staggering amount of daily transactions, and the number of people involved in every step of the process, there exists a sizeable amount of risk. Errors can and will occur- and errors, regardless of their origin, cost everyone- the cardholder, the bank, the merchant and the processor- in the long run. Knowing about the risks will go a long way toward preventing future mistakes, downtime, and legal liability, any one of which can spell disaster in today’s ultra-competitive business environment. According to the FDIC, credit card processing systems are related to several different types of risk: Credit Risk Transaction Risk Liquidity Risk Compliance Risk Strategic Risk Reputation Risk Management In each of these cases, crippling financial loss is the end result- the type of loss that can be prevented through the exercise of due diligence and best practices in several critical areas: Background. Is the party legally able to participate in the transaction? A background check on one of several web sites will verify if there is evidence of fraud, bankruptcy judgments, or other problems that could put the issuing bank, merchant or cardholder at risk. Training. Have employees who are handling transactions been sufficiently trained? Is there a documented procedure that requires verification of security codes, receipt issue, and methods for handling Internet orders? If not, the company is exposing itself to potentially crippling financial losses. Technology. Does the bank, processor or merchant have good IT support? If not, they are leaving themselves open to computer or network failures that could delay transactions for hours or days. Contingencies. Is there a backup plan in place in the event of natural disasters? Compliance. Are payment network rules and regulations being followed? If not, the business will be subject to fines, damage payments, and a damaged reputation. Implementation of a compliance management program, as well as comprehensive employee training programs will obviate most of the associated risks. Management. Have clear lines of authority and responsibility been established, as they relate to every aspect of the card processing system? Are periodic audits and reviews in place to monitor the card processing side of the business? Feasibility. Is involvement with credit card processing in the best interests of the organization? If a business entity is not willing to manage all aspects of the credit card processing as it pertains to their company, it may be time to reconsider the decision the business plan. The bottom line? In order to maximize profits in the business of credit card processing, the involved organization must make sure that business is right for their particular company, then commit to a training and management plan that will keep the organization and this part of the business in the black.
Please Rate this Article 5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
