Dealing with credit cards and installment schemes[MIGRATED]

Migrated to http://wavelet.asia/customer-portal/2011/06/28/dealing-with-credit-cards-and-installment-schemes/

When purchasing items from your store, customers may want to use credit card installment scheme for items with large payment amount. There are 3 parties involved here :
  • you (the store)
  • bank
  • your customer (end user)
This installment scheme works in a way where, customers uses their credit cards to pay the amount :
  • banks receive payment from customers in small amounts in installments (a contract between bank and customer)
  • you receive the full amount from the bank when you do a settlement (contract between you and the bank)
Credit card scheme is almost similar to a debt factoring; bank buys your Accounts Receivable for a less than your debtors value. But in this case, banks may charge a small percentage of interest / finance charge for every customer transaction (0% installment schemes exists too). This installment scheme is somewhat beneficial to you because the risks of bad debt, slow payment or fraud is transferred to the bank for a small price. Also, by giving customers an option to purchase expensive item in small payments will help boost your sales. However, the installment scheme and facility is an agreement and must be negotiated between the you and the bank. Please contact your bank on this matter.

When customers reach the cashier with their purchases and credit card, you may use 1 way to deal with credit cards and installment scheme:

 Machine Manual
1. Upon receiving the card from the customer, remember to check the authenticity of the card first. Eg.:
-   Name - Follow the race and gender of the customer.
-   Expiry date - Date not expired.

1. Same as Machine Step 1.
-   Installment Scheme - Installment Payment Plan (IPP)
-   Normal Credit Card Sales - Credit Card Slip (CCS)
2. Swipe the credit card at the machine. Your IPP was provided from Bank A. You can only swipe the card (for installments) in Bank A's machine.
2. Fill up an IPP / CCS forms. Among details needed:
-   Card number
-   Approval Code (please see Step 2)
-   Customer's signature. Please check the signature of the credit card is the same as on the IPP / CCS forms.

3. From the receipt printed, the approval code can be found. Approval code is given by the bank upon approval of the transaction. Before giving an approval code, the bank will check on the customer if he has exceeded the credit terms or limit.
3. Call the bank to inform and get approval code. The bank will require the information:
-   Customer's credit card number
-   Credit Card expiry date
-   Merchant number (this number is for companies that offer credit card facilities for trading).
-   Sales amount. If the amount is very large, the bank will check with the customer for confirmation to enhance security and prevent fraud.

4. Prepare 2 printed receipt from the machine for:
-   Customer
-   Yourself
Ensure that both the receipts are signed by the customer. Also, please check the signature of the credit card is the same as on the receipt.

4. Photostat 3 copies of IPP / CCS forms for:
-   Customer
-   Bank
-   Yourself
5. Enter the sale transaction into EMP. Please refer to Cashsales / Fullscreen Cashsales / Customer Settlement to see how to enter credit card details. This step is up to the company's policy. The reason why we suggest to put this step at the end, is to reduce wrong transaction entered in EMP. If the bank disapprove of the transaction, the cashsale in EMP need not be canceled.

5. Same as Machine Step 5. If the bank disapprove, the customer still has an option to use other credit cards or payment mode such as, cash or cheque (not for cashsale).
6. End day settlement.
-   Using the machine itself, do a settlement at the end of the day. This settlement is best if done daily so that you can receive prompt payment from the bank. When you do a settlement, only the bank will issue you the amount receivable from credit card sales.

6. Collect the IPP / CCS forms and hand it over to the supervisor / accounts department. The person in charge will check and fax or snail-mail the forms to the bank.
7. At the end of the day, checking the credit card receipts is very important using Official Receipt by Credit Card report.

7. Same as Machine Step 7 except that you must vouch the report with IPP and CCS forms.

On top of the credit card sales, the bank might charge the user company finance cost of a certain percentage. In this case, it is called Company Absorbed Finance Charges. Please see Card Payment Configuration.

Vouch Bank Statement with Official Receipt by Credit Card report or Cashbook.

If you detected an error; wrong amount received or no amount received at all :

1. Inform the bank.
2. Fax or send the IPP / CCT forms to the bank showing proof of receipt from customer.
3. Upon approval, the bank will debit the remainder amount into your account or send you a cheque.

Do not forget to perform Bank Reconciliation at the end of the month.