Realtime Processing

visa / mc

[seoer]

I have an ecommerce store where we accept visa.

customers fill in info and we manually process the card. if we had realtime processing it would be automatically processed at purchase, and our account would be credited the bucks.

sometimes customers order products that aren't in stock. if we had realtime the order would still go through. until now we have not processed any orders until the product is ready to ship, so if we don't have it in we don't bill, BUT lately some customers have flaked out after we order a not in stock item in for them. Is it legal to process payments even if the item is not shipped? we could always credit back if the customer decides they don't want it any more, but at least we would be a little more protected.

thoughts? experiences? legal knowledge appreciated.

[wackal]

in the US, it is illegal to charge a card more than 48 hours before you ship the item.

not sure about charging and crediting back, but it does seem like a bad business practice. also, depending on how many people cancel, you could be spending a lot in transaction fees.

[Corey Bryant]

A lot of of gateways also offer a pre-authorization. This means, that the money is dedicated to you.

There are a few drawbacks, the pre-auth is only good for a cetain amount of time (determined by each issuing bank). And then you are usually charged another transaction rate when you do the post-authorization / sale. You can sometimes ask for the transaction rate to be lowered though to help with that costs.

Corey

[seoer]

Anyone know whether it is illegal to charge more than 48 hours prior to shipping in Canada?

[CernyM]

I don't believe it is *illegal* to charge a credit card 48 hours before shipping.

I've heard (but have never actually seen the regulations) that it is against the Visa/MC merchant rules to do so.

[bmcgee]

It is not illegal (in the US) to charge the card more than 48 hours prior to shipping. Actually, the law allows you 30 days to ship the item after charging the card.

[seoer]

bmcgee

are you sure this isn't urban myth? just want to be sure here.

[jammac]

I know each merchant agreement is different, but here is an excerpt from our Visa merchant agreement, 'You warrant that, except in the case of approved instalment or pre-payment plans, the goods have been shipped or services actually rendered to the Cardholder.' Our MC agreement does not state anything quite that explicitly, but I still recommend checking your agreements to make sure you are not violating anything.

[PCInk]

I have recently been sent the Visa regulations by NetBanx and they do not state any time between taking the money and sending the goods/performing the service. This is in the UK and refers to real-time processing. Manual processing and other countries may have different terms.

[jammac]

I just read through our AMEX agreement and it says, 'For Charges of goods or services that are shipped or provided more than thirty (30) days after the order is made, you must obtain Authorization for such Charge at the time the order is made and again immediately before you ship the goods or provide the services to the Cardmember.' So again, quite different from our Visa - I'd check to be sure if I were you.

[Ishtaria]

wackal wrote:
in the US, it is illegal to charge a card more than 48 hours before you ship the item.

I don't believe this is correct. Do you have a link to an authoritative source stating this such as the Federal Trade Commission?

If there are any "on the book" banking laws like this, they would normally be regulated on a local state by state basis (not Federally - that is what State government is for).

Tim

[bmcgee]

I think people are confusing the "law" with what the credit cards say in their agreement. While every credit card is going to have their own terms, I'm pretty sure that the LAW says product must ship within 30 days of accepting payment, otherwise you must initiate contact with the buyer.

Could be wrong, but that is what our "expert" tells us and he's been in the retail industry for 30 years.

[CernyM]

In the USA, this stuff is all covered under the FTCs "Mail Order Rule."
[ftc.gov...]

Based on my reading, there is no requirement to ship within 30 days. What there is, however, is:

* If you make any representations as to ship date, you must have a reasonable justification for it.
* If you make no representations as to ship date, you must have a reasonable expectations that you will ship within 30 days.

--Mike
[edit: typo]

[PCInk]

> I'm pretty sure that the LAW says product must ship within 30 days of accepting payment, otherwise you must initiate contact with the buyer

In the UK it is 30 days of taking the payment and non-shipping that you must contact the customer. Then every 14 days thereafter until item is shipped.

[Ishtaria]

CernyM wrote:
In the USA, this stuff is all covered under the FTCs "Mail Order Rule."
[ftc.gov ]
...

Having this in relationship to mail order laws does make sense that it would be Federally regulated, since it is related to products shipping across state lines.

Nice work Mike. ;^)

Tim

[wackal]

hi everybody,

I definitely wasn't trying to give anybody bad info. I could have sworn I read that somewhere, but it has been awhile. I'm going back thru all my paperwork to double check and I'll post again if I come across anything.