"Last month's article covering Visa’s policy on additional fees certainly struck a chord with our customer base last month.  Over the past 30 days we have received multitudes of phone calls from clients wanting more information on this topic, or to discuss the scenario further in regards to how vulnerable they are."

Common Scams...

Because of the popularity of the subject material, we figured we would post a "part 2" on the topic of credit cards... covering one of the most common scams/issues we see pop up. In particular, the topic of issuing a credit to a "CHECK CARD" customer.

Let's paint the picture for you:  A customer calls up and orders $50 worth of food. Following normal procedure in the system, the CSR takes the details, takes the Credit Card info, and processes the order.

Five minutes later, the customer calls back ANGRY that their account has already been charged for the dollar amount, even though no food has been delivered as of yet. When the CSR/Manager tries to explain the situation, the 'proof' comes in the form of a bank statement produced on-line, showing an actual charge against the customer's account.

A slew of insults and tirades often follow... backed up with threats to report the RDS to the Better Business Bureau, the Attorney General, etc etc etc.... unless the RDS gives an IMMEDIATE CREDIT to the customer to repair the damage.

In desperation, the RDS then voids the order and issues a credit to the customer's credit card account.  This is where many managers unwittingly make a bad situation worse, and where the damage is done.

First, let's dive a little deeper into the Credit Card process.  When you "charge" a card and obtain an approval using a credit card number, what you are essentially doing is staking a claim against someone's credit limit.  The 'approval' is nothing more than an official 'IOU' from VISA/MC/AMEX that says you have 'officially staked your claim' against a portion of someone's credit limit.

No money is ever transferred, however, until you have actually BATCHED OUT the credit cards for the day.  During the batch process, you are uploading each and every transaction you have an approval for, and collecting upon their dollar amounts.  This BATCH process is what starts the ball rolling in terms of ACH transfers from your CUSTOMERS accounts to YOUR accounts.

Under normal circumstances this system works fairly well... but it gets murky when you introduce the concept of a CHECK CARD into the mix.

Unlike a CREDIT CARD that posts your IOU's against a person's CREDIT limit, a CHECK CARD posts an IOU against a person's available ACCOUNT BALANCE. The account balance, in many cases, can be checked over the internet at the issuing bank's web site, and the reduction of the "available to spend" dollar amount can be seen immediately.

As soon as the customer sees this 'charge' on their account prior to the food being delivered, an assumption is made that the RDS is running some sort of scam. (The irony, of course, is that the CUSTOMER is the one potentially running the scam). It's the process of VOIDING the order AND ISSUING the credit that causes the damage.

By VOIDING the order, no money is transferred into the RDS's account during the batch, and by ISSUING A CREDIT, money is actually moved FROM the RDS's account INTO the customer's account.  The net resulting effect is that a customer comes out $50 ahead... whereas (if enough time has passed), the RDS may additionally have to pay the restaurant for a busted order.  The proper way to handle this FINANCIALLY is to simply void the order so that no money is transferred when the batch is posted.

The "rules" for the amount of a time an approval is considered null/void is completely dependent upon the issuing bank for the Visa/MC.  Normally, it's about 48 hours before the "hold" on the funds is removed, and the customer's available funds are unlocked again.  But the damage is done to an RDS if they both VOID an order and ALSO issue a credit for the dollar amount.

There is no good answer for how to get the 'available funds' unlocked on a person's account.  This is completely up to the issuing bank.  But a sure way to add insult to injury is to start giving away money to solve the problem.  Of course there are customers that spend their checking account right up to the limit, and are simply ignorant as to how the financials behind a check card actually work.  But in many cases a customer is betting that the RDS doesn't know, and with enough noise and threatening will be able to bully them into giving away some free cash.

Software To Comply With Visa's New Rule...

As stated in last months news letter we told you some DMS modifications would have to be made in pretty short order to accommodate this new rule. We have been back and forth with Visa, but they finally gave us the green light on what needed to be done.

Modifications have been made in both versions of the DMS software to accommodate the new rule set by Visa. The changes were made in build 7.0.1.1 and above in the DMS 700 .NET software, and changes were made in build 680.3 and above in the DMS 2000 (DMS 600) software.  

In the software under "Company Setup" a user can now set a negative value as a surcharges. When a negative value is used for any of these fields the surcharge will show zero on both the internet and in order entry. However, when viewing, faxing, or emailing an order the surcharge will appear, then immediately be discounted on the following line with the text "Cash Discount" as shown in Photo #1. If you are wondering about the words "Cash Discount" Visa gave us the green light on July 5th telling us the verbiage "Cash Discount" was acceptable.

Photo #1
(This is a cash order invoice)

Photo #2
(This is a credit card order invoice)

Photo #3
(Edit Company Information/Cards and Charges)

Photo #4
(Setup Order Print/Fax Format/Titles Messages)

Notice in Photo #3 there is a surcharge of -3% (minus 3%) for cash payments, a surcharge of 5% for House Account payments, a surcharge of 3% for credit card payments and a surcharge of 3% for Gift Certificate payments. In Photo #4  the default "convenience fee" is changed to "RDS Fees". An RDS can change this to his or her choice.

Notice in Photo #2 when a customer pays with a credit card the 3% surcharge is displayed on the invoice as an "RDS Fee" or (convenience fee). In this particular photo the RDS company replaced the default (convenience fee) with the custom words "RDS Fees".

Notice in Photo #1 when a customer pays with cash the 3% surcharge is displayed on the invoice as an RDS Fee or (convenience fee), then on the next line the -3% is displayed on the invoice as a "Cash Discount" offsetting the 3% surcharge.

Remember in last months newsletter we told of these scenarios:

• Change the Fee Name to be an ADMINISTRATIVE FEE
  • The fee name was changed to "RDS Fees" see Photo #4.
• Show you charge the ADMINISTRATIVE FEE on ALL PAYMENT TYPES
  • A surcharge has been added to every form of payment, see Photo #3
• Show a DISCOUNT that cancels out the initial ADMINISTRATIVE FEE when the payment method is CASH, on an additional line.
  • A discount is applied to the cash order canceling out the surcharge, see Photo#1.

A DMS user now has the ability to apply a surcharge to any type of payment, showing it as an administrative fee regardless of the type of payment, then specifically SHOWING the same amount as a discount ONLY on a CASH payment.

The DMS 700 .NET version is now in compliance to Visa's new rule.

You may contact DataWedge with any question at 208-874-4185.

In subsequent newsletters, we will be discussing more feature additions to the software, as well as exciting additions in other areas, including the web engine. 

It's been a long time in the making, but we are just as excited to talk about the feature sets as you are to read them.

Did You Know...

Keyboard Tips & Tricks

Here's a quick little trick you'll like. If you need to get the properties for something (like an icon, for instance), just hold down your ALT key and double-click it. Instant properties!

Try it with "My Computer" or one of your regular desktop icons.

And yes, I know that you can also right-click an item and select Properties from the resulting menu. I just thought this was cooler.