How ID scanners can help you prevent chargebacks?

Recognizing fake IDs and preventing underage patrons at the entrance has always been a struggle for bars and nightclubs. But thanks to new ID scanning systems, that fight has become more comfortable.

Managers need to understand that today's fake IDs are so sophisticated and so good that it's almost impossible for the human eye to catch one. ID scanning solutions also eliminate any lingering doubt that an ID is real or fake. They also help you save the patron's information.

Scanners go beyond security.

Chargebacks occur when a customer disputes a charge on a card. The customer contacts his/her card issuer and initiates the process through your payment processor. Your processor will likely charge you a fee for each chargeback you receive. You often have the right to fight the dispute in a process called representment, where you must substantiate the charge by providing verification of the sale. Generally, if you cannot confirm the transaction, you will have to reimburse the customer.

Chargebacks can be costly, time-consuming, and can threaten your merchant account. Depending on the card type, chargeback rates exceeding 0.5% or 1.0% (by sale count) can result in substantial fines. Also, excessive rates can cause your merchant account to be terminated with the possibility of card brand banishment. Even a small number of chargebacks demonstrates that you have some unhappy customers.

The following best practices will help you prevent and fight back chargebacks.
  • Use of scanners to scan, verify, and save records of Driving licenses: Use ID scan app or devices to scan the USDL, capture customer information in reports, and save the image of the USDL. Capturing the USDL details not only helps you in fulfilling the legal formalities but also goes a long way in helping you provide real evidence in case of discrepancies.

  • Use mobile applications for a friendly interaction: Avoid buyer hesitance to get scanned on a kiosk. You can provide a pleasant patron experience by going to the customer. This way, the billing process is faster, the patron will remain comfortable, relaxed, and likely to more time and money because of the excellent customer experience.

  • Timestamp your interactions: When you capture the details of the patron, the communication is time stamped. You can capture the time patron used the credit card. This helps you in proving that the transaction in question, was made at a particular time and place.

  • Photo capture the patron's ID: As soon as you scan the ID card, the scanner automatically captures the image of the driving license and the credit card and saves the information. Both the back and the front side of the license can be captured and stored.

Common mistakes restaurants make and how to avoid them

Chargebacks are expensive and a complex problem. They impact all kinds of merchants and all sizes of businesses. Frauds in hospitality businesses due to buyer's remorse. There are two main types of chargebacks, genuine fraud chargebacks occur when the transaction was not made by the cardholder, as in a case of identity theft. Friendly fraud chargebacks happen when a cardholder disputes a charge that s/he did authorize claiming fraud and is also known as "I didn't buy that" fraud or due to buyers' remorse. There are also non-fraud chargebacks, which are purchases made intentionally by cardholders and then disputed under a claim (e.g., they never visited the restaurant)

The fact is, in either case, the chargeback dispute process does not favor merchants. Banks and credit card companies require very little proof from consumers to validate a dispute claim. Here are some mistakes merchants can make:

  • Not fightback: Chargebacks were a $31 billion problem in 2017 — a burden that extends far beyond the liability for disputed transactions. Not taking action means losing 100% of the money and can result in a significant revenue loss when ignored and a compromise on the reputation. Every chargeback needs to be carefully analyzed, presented with evidence, and you can challenge the ones that are more likely to result in a win.

  • Service compromise: 4% of chargebacks occur because the product did not meet a guest's expectations. If you notice an unhappy guest or receive a complaint, open up the lines of communication and try to quickly resolve the issue before a diner gets to their card statement to deny a transaction. If you think the guest would win a chargeback, offer a refund or a partial refund. In either scenario, a refund is cheaper than a chargeback.

  • Increasing costs: Fighting chargebacks takes time, expertise, and manpower. A recent Javelin study reports that fraud and chargeback management consumes between 13% and 20% of the operational budget. Resource allocation is also a significant concern for merchants. Small and large merchants alike can benefit from working with a represented partner, enabling them to focus on their core business and let trained experts do the heavy lifting.

  • Not saving the right evidence: Capturing customer information is the best way to prevent chargebacks. The restaurants do not adopt the best practices to capture and record customer Identity cards. However, the best way to go about this is with a time-efficient, automated, and preferably mobile solution. 

Access to reliable chargeback data is limited. Nevertheless, even confined data clearly shows how the merchants in the hospitality industry pay the price.

Effectively fighting chargeback fraud requires training. Merchants need reliable information identifying where fraud is coming from, and a thorough understanding of how to respond to chargeback frauds. The industry is going through radical change to serve as a basis for long-term, positive change.

Ready to enhance your business security and minimize chargebacks? ONE BCG is here to provide you with the reliable and safe ID scanning solution you need. Contact us today to learn how we can help protect your business.

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