Fraudulent Charges & Chargebacks – How to Prevent Them & Win Disputes

Managing fraudulent charges, retrieval requests, and chargebacks can be a struggle. But no matter what kind of ecommerce store you operate, credit card disputes and chargebacks are guaranteed to occur at some point. To make matters worse, consumer studies show that about 86% of chargeback attempts are fraudulent in nature.

Using best practices to prevent all forms of credit card fraud is always best, but occasionally, prevention won’t be enough. For those chargeback attempts that you can’t prevent, winning chargeback disputes is a little bit art and a little bit science. But with a few tips, any business owner can learn to master it.

Disputing a charge is common in retail ecommerce, and this post will teach you everything you need to know when any given customer disputes a charge. And when prevention fails, you’ll know how to make sure you win as many chargeback disputes as possible. You can’t avoid a chargeback fee from your bank when a chargeback occurs. But you can minimize the amount of time and money you lose this unfortunate reality of retail.

By the time you finish this post, you’ll be ready to prevent most chargebacks, and for those that fall through the cracks, know how to tackle those disputes head-on.

Follow Processor Protocol

Payment processors have protocols already in place for merchants to help prevent chargeback fraud. One of the most fundamental protocols involves maximizing security for credit card transactions by requiring the entry of an expiration date and security code from cardholders for each and every transaction.

Payment processors also need to know if you will be processing CNP (card not present) transactions. Since this changes your risk profile as a merchant, processors require permission before you begin charging cards from afar.

Use a Clear Descriptor

Clear descriptors for your company name and products will reduce the number of chargebacks. This is because it gives customers more clarity when they inspect their credit card statements, making it obvious what they purchased, and from whom. Generic or unclear descriptors for your company and products on billing statements are one of the top reasons for chargeback mistakes where a customer disputes a legitimate purchase, simply because they don’t recognize the entry on their credit card bill.

Here’s an example: Say a customer orders a pot and some soil from your online nursery. If your nursery is called “Joe’s Plants” but your actual company is called JOEHANSONSTORESLLC, your customer may be confused if they don’t see “JOES PLANTS” on their statement. Similarly, if the pot appears on the statement as a generic entry such as “CONTAINER009ZS,” the customer may believe the charge is suspicious rather than legitimate.

Document Everything

Good record-keeping is critical for preventing chargeback fraud and disputes. One piece of documentation that will make fraudulent chargebacks much more difficult to get away with for fraudsters is an invoice or bill that the customer must sign, showing exactly what goods or services were exchanged. Paperwork that spells it all out specifically will give you the best ammunition if there is a chargeback dispute: a clear, easy-to-reference record of the entire transaction.

Good recordkeeping in your back-end operations is the other critical aspect of thorough documentation. All of your internal sales records should include a full outline of all information for transactions, such as transaction dates, transaction amounts, any applicable taxes, and authorization information regarding the payer. With this information always ready to be accessed, gathered, and sent to your bank, you’ll be better equipped to come out on top during the dispute process.

When Customers Have Concerns, Be Timely

If customers express concerns, complains, or disputes, always respond in as timely a fashion as possible. To do so, you need to set up a clear and efficient process for addressing customer complaints.

When a customer complains about one of their charges, your payment processing partner will notify you. Once you receive this notification, act on it immediately. Your process should include these steps:

1.   Identify the Source

Identify the source and look for a reason code for the chargeback. Reason codes accompany every disputed charge, and are meant tell you why the customer attempted to reverse the charge. Reason codes are often categorized either as a merchant error or as some kind of fraud attempt. However, reason codes will be exploited by scammers to attempt to paint a fraudulent chargeback as legitimate.

2.   Identify Whether or Not the Chargeback is “Friendly Fraud”

“Friendly Fraud” is where a customer intentionally disputes a charge, hoping to keep both your product and their money. Often this is due to buyer’s remorse, but there are other potential reasons that a chargeback could be legitimate: maybe their kid grabbed their phone and made the purchase, or they made the purchase using a spouse’s account without their permission.

Most times, unfortunately, the intent of friendly fraud is malicious. In these cases, customers know they made the purchase and are just trying to see if they can get their money back. If you can identify this type of fraudulent activity, you have a chance to beat the chargeback. Successful identification and handling of friendly fraud will improve your risk profile in the eyes of banks, showing them that you aren’t disputing charges lackadaisically.

3.   Fight the Chargeback

Fight the chargeback by gathering all of your evidence (more on this next), and submitting it to your merchant bank as part of your chargeback dispute.

How to Fight Chargebacks

Ever ask yourself, “How do I fight credit card chargebacks?” Follow these steps:

Gather Evidence

Gather up all your records and evidence (this is where your excellent recordkeeping habits come into play). Your evidence should include materials supporting everything that you need to show the bank in order to convince them of your side of the dispute. Gather the following evidence via computer screenshots, and highlight the relevant parts.

To take screenshots, use the “Print Screen” button on your keyboard. Then open image editing software, start a new file, and use the “paste” function. Your screenshot should appear. You can then use the software’s editing function to highlight or circle the relevant parts in a bright color.

  • Your company’s policies wherever they are displayed on your payment gateway/website, and during the buying process. This includes cancellation, refund policy, the renewal and return policy, and your website’s terms of service (ToS)
  • The customer’s IP address, available from your website’s analytics tools
  • As complete a collection of possible of all the web pages showing the customer’s check-out process and purchase confirmation
  • Proof of delivery of the purchased merchandise to the customer
  • Any ongoing use of your website or ecommerce store by the same customer (determined via activity on your site from the same IP address as the customer)
  • A full payment and purchase history from the customer in question

Look Out for Signs of Fraud

As a merchant, you need to be on the constant lookout for any signs that fraudsters are buying from your business. With good recordkeeping and transaction histories, this isn’t difficult, but requires constant vigilance. A human owner or employee should be reviewing transactions daily to be on the lookout for any of the following signs:

  • Shipping and billing addresses that don’t match, or change regularly for the same customer. Shipping and billing addresses in separate countries is a particularly suspicious sign.
  • Incorrect security codes. Having the correct credit card info except for the security code is a common sign that the payment is being made with a stolen credit card, or that the buyer committed identity theft to get someone else’s credit card.
  • Conduct confirmation calls with customers. By doing this on an individual basis, especially for a transaction that looks potentially suspicious, you can confirm some of the customer’s information and look out for any signs that they might be lying with intent to commit fraud.

Further Prevention of Friendly Fraud

Whether it’s a Mastercard chargeback or a chargeback on a Visa debit card, customers who think you’re a shady or unfair company are far more likely to commit friendly fraud than those who have a positive impression of your brand. That’s why a focus on great customer service and clear, well-presented policies are so important for preventing chargebacks.

Make sure your shipping, billing, and return policies are not only clear and easy to understand, but are displayed prominently throughout your website and during the actual checkout process. Be especially mindful regarding subscription services that may auto-renew, as unclear renewal policies are a common reason for chargebacks. The clearer all of these policies are, the less likely customers will be to make a chargeback attempt.

Final Thoughts

The bottom line is, all ecommerce merchants who accept debit card and credit card payments have to deal with fighting chargebacks. With some best practices, you can reduce chargebacks, but eventual chargeback fraud is inevitable.

Thankfully, with a little preparation ahead of time, you can spring into action as soon as customers dispute the charge with their credit card issuer—and both win the dispute, and minimize the time and money you spend dealing with it.

Guide to PA-DSS & PCI Compliance for Merchants

Hackers are everywhere, and they’re trying day and night to steal customer credit card data. Identities and money have been stolen as a result of hacks affecting some of the world’s biggest brands, so even the big names like Target and Macy’s aren’t safe from theft (and, in fact, are attractive to thieves for being large, juicy targets.) With the explosive growth of ecommerce, the cyber risk is greater than ever.

Thankfully, there is a set of security standards called PA-DSS. Also known as the Payment Application Data Security Standard, these were created to ensure that credit card information is transmitted and stored securely for each and every card not present transaction. Just as computers should have anti-virus software, every payment application should have protections in place from hackers. These protections are a key component of cyber security for modern businesses.

If you’re a business owner and you process payment cards remotely, you almost certainly need a POS system and merchant account. That means you’ll need to know a thing or two about PA-DSS. Basically, these are international security standards that every business processing credit card transactions needs to adhere to in order to protect customer data. It’s all about security and compliance: every company that handles credit card data for these transactions needs to adhere to the standards so that payment data remains safe.

With everything else you need to stay on top of as a business owner, this might sound complicated and maybe even a bit scary. But don’t worry! With this guide, you’ll be able to understand everything you need to know about what PA-DSS is, why it matters, and how to make sure your business is compliant.

What is PA-DSS?

PA-DSS is essentially just a set of requirements for vendors of payment applications involving credit cards. They are administered by an organization called the Payment Card Industry Security Standards Council, or PCI SSC.

Since payment card industry PCI compliance is considered critical, any reputable payment application or POS system you buy will already have features ensuring compliance with the standard is built-in. However, businesses that process a certain number of transactions need to adhere to certain PCI requirements to meet the official PCI security standard themselves.

Beyond the standard itself, it is also up to you as the business owner to adhere to best practices to protect your customer’s payment card data. Your bank can be fined if you are found not to be fully PCI compliant, and they will then charge you penalties as a result. Not only can penalties for non-compliance add up fast, but they can result in credit card processing partners deciding to avoid your business and cutting off your ability to serve customers.

Companies that develop applications that either send, process, or store cardholder data need to comply with PA-DSS standards to ensure that all payment information is kept safe at every stage of the transaction process. They are designed to protect you as the merchant as well as your customers from fraud, loss, and theft.

Aside from being legally required in some states, there are many benefits to using PA-DSS validated applications. First off, since you can be sure these applications had to go through a rigorous testing process, you know that you are getting a product that is held to the highest possible PCI DSS standards.

As a byproduct of this, more of the requirements are taken out of your hands. That frees you up to focus more on what matters: growing the business and serving your customers. You’ll have less to worry about, knowing that your payment applications are meeting PCI requirements and are fully compliant.

Steps to Ensure PCI Compliance with PA-DSS Standards

The process for ensuring regulatory compliance with the PA-DSS standards is quite involved, achieving the highest possible level of security for customer’s credit card and debit card information. These are the steps that are taken for every payment application to receive the official stamp of PCI compliance:

Analyze Data Flows

The first set of tests are designed to analyze the flow of credit card data, looking at all the avenues and outlets where payment data is received, how and when data is transmitted, where it goes at each step, and where it is stored.

You have to identify all systems throughout the payment process that receive cardholder data. This might include a POS system, hard drive, cloud-based network, or other system. Each of these systems needs to have ways to protect the data during travel and storage.

Only by knowing how and where cardholder data travels through your network can you know how to completely protect that data.

Identify Card Storage Locations & Security

For this step, you need to know what sensitive card data is being stored, and where. The data has to be encrypted and every storage location needs to be secure. Once data is authorized for a payment to go through, sensitive data should not continue to be stored. The longer data sits on a server or hard drive, the more opportunities hackers will have to steal it.

This includes all of your providers. Most business owners aren’t aware which of their providers are handling credit card data, but it’s usually more than one—for example, the company that provides your payment application, your bank, and your merchant account provider might all transmit or store card data.

Understand Data Documentation

In order to understand your data, it needs to be properly documented. That means that anyone viewing the data can easily make sense of what it is, where it came from, and other important information.

For security reasons, it’s extremely important to be aware of what people, computer programs, apps, and other technology are involved in your data documentation process. A breach involving any of them could result in sensitive customer information being stolen.

Know the Reporting Requirements

The reporting and other DSS requirements vary depending on the size and scope of your business. Standard PCI requirements change for each business because businesses have different needs for PCI risk compliance based on their individual risk assessment.

PCI and credit card brands designate businesses as either Level 1, Level 2, Level 3, or Level 4 merchants. There are also different criteria from different credit card companies, such as Mastercard and Visa.

While Visa ecommerce PCI rules are similar, Here’s the breakdown of each level for Mastercard:

Level 1

Level 1 merchants are any that have suffered a hack or data breach that resulted in account information being stolen or compromised. Merchants that process over six million total Mastercard and Maestro transactions each year are also considered Level 1. If Mastercard, for whatever reason, deems your business to be potentially high-risk, it can also designate you as a Level 1 merchant even if you don’t meet the other criteria.

Level 1 merchants are required to have an annual on-site visit from a compliance representative known as a Qualified Security Assessor, or QSA. These merchants also need to have their networks scanned quarterly by an ASV, or Approved Scanning Vendor.

Level 2

According to Mastercard’s website, Level 2 merchants are any “with more than one million but less than or equal to six million total combined Mastercard and Maestro transactions annually.”

Level 2 merchants have to complete an annual Self-Assessment Questionnaire, or PCI SAQ, and also must undergo an on-site PCI assessment at their own discretion. As with Level 1, their networks are also required to be scanned quarterly by an ASV.

Level 3

To be classified as a Level 3 merchant for Mastercard, your business has to process between 20,000 and 1,000,000 e-commerce transactions per year. You also automatically become a Level 3 merchant for Mastercard if Visa’s system classifies you as one.

Level 3 merchants have similar compliance requirements as Level 2.

Level 4

Level 4 merchants are simply those who don’t meet any of the criteria for Levels 1-3. They have the same compliance requirements as Level 2-3.

The Self-Assessment Questionnaire

To determine your PA-DSS reporting requirements, a self-assessment questionnaire is used as a guide. The questionnaire determines what kind of business you run, and gathers details in order to determine what steps you have to take to remain PCI compliant.

Document Everything

For PCI compliance, documentation is extremely important. Whether it involves human hands or is done solely by an automated computer system, have a set of documentation procedures and policies in place and stick to them.

Use a PCI Compliant Service Provider

You need to use a PCI data compliant service provider to process your card not present transactions. So how do you know if any given company adheres to the PCI standard?

You can check if any given payment application provider is PA-DSS certified. To find out, you can visit the PCI website. There, you can check the compliance status and find a list of officially-verified PCI compliant payment applications. The list can be found at

Correct Deficiencies

Once you find vulnerabilities in your data transmission, storage, or reporting systems, it’s important to correct them right away. Penetration testing is an important way to find gaps in your security. By using manual methods to try and simulate a data breach, you can find weaknesses and fix them fast. These tests can be performed by a penetration testing provider.

If there is a breach, having an incident response plan in place will ensure you’re ready. This plan needs to find ways to isolate and protect customer data, and should include a protocol for how to inform customers in a transparent way the “what, why, when, and how” of the data breach. Then use the breach as a lesson, closing the gaps in your security and PCI compliance procedures that allowed the breach to happen.

Threats and vulnerabilities are a fact of doing business, and unfortunately for some merchants, it takes an actual breach to show them how to respond. By being prepared, you won’t be one of them.

Review & Maintain Your Compliance Program

To stay up-to-date, your PCI compliance program should be reviewed and maintained regularly. With the fast rate of technological change, the standards are always being updated to keep up with the development of new security, encryption, and payment systems. Security measures also need to keep up to match the development of new forms of payment, such as mobile payments.

Final Thoughts

With hackers and thieves always trying to stay one step ahead of security technology, PCI data security is key. It’s never been more important to keep your business, and your partners, PA-DSS compliant. A third-party compliance audit can help you fill in any gaps to get your business up to standard. If an audit sounds scary, trust us—it’s even scarier to have your customer’s credit card information stolen as a result of not being DSS-ready.

The PCI council makes it easier to do with guides, FAQs, and other resources, but they’re not responsible for making sure your payment application is compliant.

That’s up to you! For that reason, you’ve got to remain vigilant and make sure that PCI compliance is a fixture of your business for card-not-present transactions. If not, a hack or data leak could become such a costly burden than it forces you to shut your doors. That’s why compliance with PCI is so important—without it, you can’t stay in business!


Why Are Magstripe Readers Becoming Obsolete?

A magstripe is a magnetic stripe on the back of a credit card that stores card data, and can be read by card readers at payment terminals. They have been around at least as long as credit cards, but are becoming obsolete as they’re replaced by newer technology.

There are a lot of reasons that magstripe readers are becoming obsolete. By the end of this article you’ll not only know why they’re being disappearing, but learn more about the technology that’s taking their place.

Disadvantages of Magnetic Stripe Cards

Magnetic cards essentially store data using magnetized, microscopic iron particles. When the card is swiped through a reader, these particles are “scanned” by a magnetic reading head. Unlike a bar code, which is read by a bar code scanner using light, credit cards with magnetic stripes use magnets in order to work.

The problem with magnetic technology is that in order to function, the stripe has to make physical contact with the reader. That means that the stripes break down, and over time they eventually stop working.

As a result, banks have to issue fresh cards every couple of years. Also, since the magnetic strip is exposed to the elements, the card data that it stores can be easily corrupted. Strong magnets can also corrupt data on the cards, interacting with the magnetic field and disrupting the magnetized iron particles that the strip is made of.

Another danger to magnetic cards is static electricity. A strong enough electric charge coming in contact with a strip could damage it. That includes your freshly-dried laundry!

Chip-Based Cards: the Future of Credit Cards

In recent years, chip-based cards have begun to replace the magnetic swipe system. These cards use a computer chip instead, making them more advanced than the old magnetic card system. They also use a different data format.

Also known as EMV and smart payment cards, chip cards store customer and payment data on a tiny integrated computer circuit. These are inserted rather ran swiped, and are read via “near-field communication” technology, or NFC. The customer then enters a pin code, and after the transaction is confirmed, the total is taken as a debit from their credit card or bank account at the cash register.

Using NFC means the chip is “contactless,” meaning it doesn’t have to make physical contact with anything to be read. This is why chip cards can last longer than magnetic strips. Currently, chip cards still have magnetic strips as a back-up and for systems that haven’t adopted a chip reading system yet.

Chip cards are fast, secure, and convenient. However, there are still barriers to the adoption of chip cards.

Cost to Transition

The main challenge with chip cards is that they don’t work with a simple magnetic card reader. Instead, they require smart card technology, meaning retailers have to upgrade their point of sale equipment. Since chip cards are processed at more expensive types of terminals, small businesses might be hesitant to invest in the transition.

In spite of this, modern POS devices are being built with chip card compatibility built in. Modern terminals often have a mobile card reader, or other mobile card compatibility options that work with iOS (iPhone) and Android devices. This makes it easier for retailers to come on board.

Chip cards do cost more to produce, however. Since these advanced chips are able to communicate with smart card readers using radio frequencies, this is a more expensive technology to manufacture than the old magnetic stripe system. The higher cost per card is then passed on to merchants and consumers.

However, as always happens with new technology, the computer chips will get less expensive over time. The same goes for the smart card readers that businesses need to process payments on the newer cards.

Benefits of Chip Cards

Despite being more costly to manufacture, chip cards come with tons of benefits for all parties: customers, retailers, and even the banks that issue them. We’ll discuss these benefits next.

Fraud Prevention

Chip-based payment cards are much better at preventing fraud than magnetic strip cards are. One of their fraud prevention innovations is a unique code that the card generates for every transaction made. With magnetic stripe cards, your actual payment info is transmitted every time the card is swiped in a credit card reader. By using a unique and cryptographically-secured code instead, it becomes harder for criminals to match transactions and payment info with any particular customer and credit card.

Protection Against Cloned Cards

Cloned cards are credit cards made, illegally, that are functioning matches or “clones” for an existing card. The chip system makes it harder for thieves to do this. Here’s why:

Mag stripes are relatively easy to clone. With the chip, on the other hand, information like your credit card number is protected. Even if a hacker gets the info from the magnetic strip, if your card has a computer chip, the hacker can’t steal your identify from the stripe alone.

Even if your card is lost or stolen, a hacker would have to know how to take apart and reconstruct the computer chip in order to clone your card. Gone are the days when all it took was a simple swipe to have your identity stolen.

More Secure Card Present Transactions

For card present transactions, where a customer has the physical card with them while making a purchase, chip cards are much more secure. That’s because with mag stripe cards, all the sensitive information a hacker would want is stored directly on the stripe. They’re relatively easy to hack, steal, or clone with modern technology now available to thieves.

Customers at chains as big as Target, which processes millions of transactions, have had their identities stolen as a result of using magnetic stripe cards. However, with a chip, the steal isn’t so easy. Since they use computer chips that cryptographically protect payment information, chip cards are nearly impossible to replicate through the old hacking methods.

Support for Many Transaction Types

Chip cards come with support for many different transaction types, making them very convenient to use.

They are compatible with the two most common types of transactions: card present transactions, and card not present transactions. But because they’re backwards-compatible, they can even be used with the traditional old style of magnetic swipe card readers.

Global Standard

Because of their safety and security features, chip cards are becoming the international global standard for banking and retail. As this happens, price will keep going down and features will continually improve. This is yet another advantage, and it means chip cards will be accepted at more and more retail stores.

In addition, payment apps, cash drawers, and POS computer systems with integrated hardware like keyboards and receipt printers are all adapting to meet the needs of the chip card. With components that fit together via USB, an entire front-end operation can be built without the need for magnetic-based cards. From USB ports and lightning connectors to cryptocurrency, magnetic strips and their hardware will slowly be phased out entirely.

Final Thoughts

Computer chip based credit and debit cards aren’t just coming—they’re here. As they become more popular and are firmly enshrined as the new global standard, their superior security will only make magnetic cards more and more obsolete.

As this process continues, eventually card readers won’t even have a swipe option available.  Once this happens, the old magnetic style of credit card will become useless. Retailers won’t even have a way to accept them. The popularity of mobile apps that allow customers to pay with their phone or tablet will be a final nail in the magnetic card coffin.

The only real barrier to entry is price—and as the cost of implementing swipe card readers and issuing chip cards decreases, the days of the old magnetic stripe will be just about completely over. As a result, card payments will never be the same!


As more and more customers choose to pay with debit cards, credit cards, and contactless payment options, the red tape that merchants face can become daunting. Some merchants—especially restaurants—are choosing to simplify the sale while saving money through cash discounting. Cash discounting is when a merchant allows a customer to receive a discount when he or she is paying with cash.


Each time a merchant accepts a card payment, most likely they’re paying two fees: a contract fee to engage with the credit card processor who processes their transactions and an additional fee each time a card is charged—a transaction fee. When a consumer pays in cash, the cost of the transaction for the merchant is lower (and sometimes nonexistent). Because of this, many merchants offer discounts for cash paying customers. In this scenario, a merchant chooses to reduce the total bill if a customer pays with cash (instead of increasing the bill through a surcharge or convenience fee if a customer pays with a card).


Most merchants want to spend more time doing the job or providing the service—whether at an auto repair shop, a spa, or a local deli—and less time worrying about payment processing, transaction fees, and chargebacks. Some merchants are more ideal for cash discounting programs than others. For in-person transactions, cash can save time (no signatures or PIN numbers) and money (no credit card fee or potential future chargeback). For this reason, many restaurants, coffee shops, delis, and take-out shops are opting to offer cash discounting to customers to cut back on unnecessary fees.


Businesses often pass along some of the fees of their merchant account to customers directly so that credit card processing fees don’t cut into their profit margins. Merchants do this usually in one of two ways: increasing the cost of items pre-sale and implementing a cash discount OR adding a convenience fee to card purchases.

With cash discounting, customers who make card purchases aren’t penalized for use of the card, but all customers are incentivized to choose cash as a payment option. Cash discounting is legal in all states and isn’t subject to regulations.

If a merchant chooses to implement a surcharge program for card transactions instead, there are a few considerations:

  • Credit card surcharges aren’t legal in every state. Merchants would need to check to make sure their state allows for a surcharge.
  • Debit and prepaid cards may not be surcharged; only credit card purchases may be surcharged, and then only under certain circumstances.
  • Adding a credit card fee requires additional communication with the credit card network and with customers. Merchants who intend to surcharge must register with the issuer and acquirer, as well as making the fee as transparent for customers as possible (at the point of sale, on the receipt, etc.).
  • There are caps to the amount a merchant is allowed to surcharge.


For many reasons, cash discounting is a more attractive option for restaurants and other local food-industry shops. Most transactions they complete are ideal for cash discounting, and implementing such a program helps save on associated cost of processing fees.

Reduced Fees

In order to accept credit cards, restaurants are usually paying two fees—a base fee to a card network to process the payment, as well as a transaction fee each time they accept a card as payment. By encouraging customers to pay with cash, restaurants are able to eliminate the transaction fee, and in some cases, pay a lower base fee to processors.

Easier Implementation than a Surcharge

Restaurants are more easily able to implement cash discounting than a surcharge program in most cases. Usually, restaurants either make a notation somewhere on the menu (and at point of sale) that menu prices reflect the cash price of the item (indicating that the cash discount is already reflected) OR they raise the price on all items in order to offer a discount when a customer pays with cash. Cash discounting can be a set percentage (three percent of the total, for example) or can be a set amount ($0.25 off the bill, for example). Most restaurants determine their cash discount by studying their sales (average ticket cost, cost of menu items, etc.) and finding discount point high enough to incentivize customers (while still being cheaper than the alternative card processing fee).

Encourages Cash Payments

When a discount is offered, more customers are likely to pay with cash if they have it on hand. Although cash payments are only easier for restaurants in some ways, usually the benefit of combatting transaction fees and eliminating chargebacks provides reason enough to deal with the negative aspects of cash transactions (counting, depositing, employee accountability).

Chargeback Reduction

Encouraging cash payments also help merchants cut down on the number of possible chargebacks they incur. A chargeback is a reversal of a credit card charge enacted by the card-issuing bank at the request of the cardholder.

Often, if a customer is unhappy with an order or a particular service, rather than requesting a refund from the merchant, he/she will go directly to their bank and request a chargeback. Sometimes chargebacks are a result of identity theft or fraud, but more often than not, chargebacks could be eliminated if customers were willing to mediate their complaint with the merchant first.

In the food industry, a customer might request a chargeback from the bank if they dispute the bill total or have a disagreement about the items they were charged for. By incentivizing cash purchases, the merchant ensures that he/she has the opportunity to mediate the dispute first instead of getting smacked with exorbitant chargeback fees.

Although restaurants and food-related shops will still likely deal with chargebacks, cutting down on total card transactions helps fight the total number of chargebacks or disputes they have to deal with regularly.


Cash discounting programs can offer strong incentives for food-related merchants as well as customers. While customers are able to save some of the cash they’re spending by choosing not to swipe, merchants also win by reducing the number of overall transaction fees and potential chargebacks they incur.

Cash discounting still has some negatives—cash flow management and reporting, for example, as well as overall perception of those customers who still prefer the card—but is worth reasonable consideration. In simplifying a sale and keeping transactions quick and relational, cash is still king.

New Jersey Senate Expected to Clear Bill Allowing Smart Parking Meters for Instant Ticketing

Parking meters in New Jersey might be about to get smart—and that that means customers who go over their paid time are going to have to pay up, or else they’ll be ticketed instantaneously. That’s thanks to a new bill in the New Jersey senate that would clear the way for new “intelligent parking” meters throughout the state.

These technologically-advanced meters will automatically send a ticket in the mail to anyone who doesn’t feed the meter before a preset grace period expires. The grace period can be within five minutes, or can be customized by the town or city installing the meter to allow extra time.

The bill will merely clear the way for municipalities throughout the state to install the meters if they want to, so it doesn’t force them to adopt the new system. But with the promise of increased local and state revenues that these smart parking meters could bring, public works experts think it’s likely the smart meters will begin popping up soon regardless of if this particular bill passes.

In addition to being a revenue source, smart parking meters are also looking like a potential revenue saver. With a real-time data like a time-stamped photo as proof that the parker exceeded their paid parking period, there will be less time wasted in court trying to prove or disprove tickets.

Overall, adopting the system is expected to cause the number of total parking tickets issued to skyrocket by the millions. It amounts to nothing less than a revolution in parking enforcement. As an added bonus, the meters make parking more convenient for visitors and locals alike by integrating debit and credit card and mobile payments. The meters could also include support for multiple languages, streamlining the parking process for non-English speaking parkers.

The senate is expecting to vote on the measure soon –an earlier senate vote was held off due to a number of senators being absent for the vote.

In a city in Bergen County, a test had already been underway in multiple parking areas throughout the city. In these Bergen-based  lots, garages, and other parking structures, a fleet of parking meters that connect to web-connected cameras is already issuing parking violations without any human intervention. With notification to a towing company, cars that go over their allotted time can then be towed off the street or other parking location.

It works like this: When drivers pull into the lot’s parking spaces, they use one of their preferred forms of payment to deposit funds at nearby pay stations. Then, the meter’s integrated camera scans each vehicle, collecting the license plate number. With this parking data, the meters can automatically enforce parking fees, cutting down on illicit free parking. The whole transaction occurs seamlessly, and a mobile app integration could allow customers to use real-time data to find available parking spots or even book their spot ahead of time.

Officials in Bergen and other New Jersey counties are hoping the meters will hasten turnover times, freeing more spaces and making parking in the area more available and efficient. But it would also free up a massive amount of time for municipal employees, who could then focus their work hours on other issues.

The ability to run digital advertisements on the meters would add yet another revenue opportunity for towns that adopt the smart meters. And with a provision in the law charges $2 on top of every ticket that gets issued, lawmakers have secured a source of funding they say will be devoted to anti-drunk driving initiatives. While criticism has been lobbed at lawmakers for increasing meter rates with the proposed surcharge, most deliberation over the legislation had to do with finding ways to use it as an opportunity to work on reducing drunk driving in the state.

Sen. Declan O’Scanlon, R-Monmouth voted against the bill, saying it should have required parking management software with a mobile app that would allow drunk customers to opt for a taxi, and leave their cars parked until morning. The issue was a deal-breaker for Sen. O’Scanlon, who last year advocated the bill be passed, but only under the right conditions.

Whether the smart parking meters change parking as we know it in cities across America or turn out to be duds, parkers in Bergen County are about to have a much harder time dodging parking tickets.

As Palisades Park, NJ Borough Administrator David Lorenzo told reporters, “Saying I was never here, I wasn’t at the meter, no one saw me…in essence it’s provided well, that you were there, time-date stamped and everything else, with a nice picture of your car.”

Or, as he summarizes the smart meter system:

“A picture’s worth a thousand words…or a $31 ticket.”

Meanwhile, local business owners who spoke to broadcast journalists from the local news affiliate took different positions on the bill. Some thought the meters would hurt business, deterring customers from patronizing stores in the area. Others praised the system for improving turnover rate, letting more customers find parking and do their shopping. Agree or disagree, customers are going to have to be 100% sure they pay the meter in order to avoid a fine.

If the meters become a nationwide phenomenon, the debate over their impact is only likely to intensify.