Authorization Abuse
Holds are used to hold the amount of a transaction until the final bill is received or the sale cycle is complete. If you hold a transaction too long, you will need to submit it again.
What is considered a misuse of authorization?
- Keep an amount too long
- Exceeding the Hold Amount
- Violation of the rules of the card network
- Refusing to settle any transactions
Transactions That Are Duplicated or Declined
The holding of records can be difficult to track, and approvals may not always be guaranteed. It can result in duplicate holds which frustrate customers and lead to fines and fees.
You can also expect the bank issuing the card to decline the transaction. It’s difficult to tell what went wrong for both merchants and their customers. This messy situation could lead to late or non-payments for B2B clients.
Even if you hold to avoid chargebacks, they may still occur.
Customer Convenience
Holds are a common problem with credit card payments. Companies must monitor authorization holds and absorb processing fees.
Temporary holds result in more work and less gain. Businesses are looking for alternatives to avoid chargebacks and fraud.
Alternatives to Credit Card Holds
Innovations like real-time bank-to-bank exchanges are becoming more common. Merchants and customers alike are attracted to low fees, instant balance verification, trackable payment, and high-security measures.
Payment gateways today have security features to protect card and payment information. We can store digitally the information we need for future payments, rather than holding on to transactions. Businesses can store the ACH data of their customers in their systems and charge extra fees.
Paystand, for example, uses Tokenization to simplify payments and protect sensitive customer data. The sensitive information of customers is not stored but converted into a payment token. Then they can authorize payments without having to add their preferred payment method each time.
Merchants can add convenience fees to credit cards through some payment portals. Customers are encouraged to pay via ACH or bank-to-bank. Merchants can now add a no-fee payment option to their payment methods. This will lead customers to safer transactions.
Digital payment such as ACH or bank-to-bank transfer, eliminates the need to worry about misuse penalties, time limits, and other fees. You can create a seamless customer experience by providing full visibility and security of every transaction and reducing other risks such as fraud and chargebacks.
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