Debit Machines

Credit card fraud is an concern, especially in the world of online business operations. Scammers have developed elaborate methods of billing stolen credit card information for large amounts. As a small business owner, you should see it as a red flag when you get an order for an amount of merchandise far larger than your typical order size. If this occurs, you need to take extra precautionary steps to ensure the legitimacy of the order.

For example, if your store typically takes orders for several hundred dollars, and then you receive a purchase request for goods valued at several thousand dollars, this should raise a red flag and be looked into. Extra research into the situation is required, even if your site's electronic payment gateway has verified the credit card and address information. Address Verification and Card Value Verification are not enough to conclusively determine whether a card has been stolen.

It is important to adequately vet unusually large transactions before any goods are shipped. A con artist will obviously not have the goods shipped to the stolen card's address. Your shopping cart software could have a built-in feature to detect discrepancies in distance between the credit card address and the IP (Internet Protocol) address of the purchaser. If not, there are sites online that can perform this function of locating IP addresses.

For large orders, it's also wise to contact the customer directly to determine their legitimacy. If the customer is a fraud, they will most likely not provide a real phone number. Their e-mail address will also typically be from a Hotmail, Yahoo or similar such free service. You should e-mail the customer and request a reply to verify the order, and perhaps even ask that they provide you with a signed credit card authorization form.

Having vetted the order, make sure you tell the customer that you will require their signature upon delivery of the merchandise, or it will be returned. After this, make sure you contact your merchant account provider, and let them know what steps you took to try and verify the suspicious order. Merchant account providers will typically put a hold on money for an order that veers from the merchant's usual purchase trends. Speak to a representative to find out if anything else needs to be done, or if they need to take any steps themselves to verify the customer.

It might seem like a hassle to take these precautionary steps, but if you do you can rest easier knowing you are safer from online fraud.

I probably get 4-5 new Merchants every week contacting me and asking if I can help them get a used Debit Machine they bought online hooked up to a merchant account provider and the short answer is "No, I can not".  Never ever buy a used Debit Machine in Canada hoping to find a provider who'll hook up the processing services.  It doesn't work this way in Canada.

However in the US this is the way it works, you can just purchase hardware from anywhere for a couple hundred bucks and then shop around for your provider the same way you would with a cell phone provider and cell phone hardware, but when it comes to Debit Machines and Canada - no go. No Canadian company (that I am aware of) will take your used equipment and hook it up.  You have to get it from the provider directly and yes it cost much more than a couple hundred dollars.  Typically around $1000-1500 for a terminal with a good warranty.

The reason this is like this is most terminals will have digital locks on them, so even if the provider was willing to take it they may not be able to get their software on the terminal because they do not have the KEY that the last provider coded on it.  The second reason providers won't take these used terminals is due to warranties, they will not give warranties on something that doesn't come from them directly.  The third is they "don't have to" and there is still money to made in Canada on selling Debit Machines at retail pricing and on Debit Machine Leases. (Which is the main driving force - most likely) It will probably change at some point.  I find we are usually behind the US standards by about a decade, by then we may have a completely different way we transact, but that's a whole other post.

The moral of the story is... if you have or are starting a Canadian business that will require a Debit Machine, don't purchase one online second hand.  Make sure you get the hardware directly from the Merchant Account Provider.