Payment Processing when the POS Terminal is Down

In a face-to-face setting you should always try to complete a swiped transaction. It reduces the probability of a fraudulent transaction taking place and it gives you the best processing rate. The card's magnetic stripe is read and the information is sent to your payment processing bank for authorization.

You are responsible for making sure that the transaction is valid and are required to examine the card for signs of alteration and to verify the cardholder's signature by comparing it to the one on the sales receipt.

But what do you do if the terminal cannot read the card? You still must be able to accept credit card payments, right? Yes and I will show you how to do it.

Why Is the Card Unreadable?

It actually happens quite often that the credit card machine will be unable to read the magnetic stripe. There can be several reasons for that, including the following:

• The POS terminal is malfunctioning.
• The customer is swiping the card improperly.
• The magnetic stripe is damaged or demagnetized. If that is the case you should not jump to the conclusion that a fraudulent transaction is being attempted. Yes, that is definitely possibility, but it can also happen by accident. I have seen a Starbucks barista deal with the problem by wrapping the card into a plastic bag and successfully swiping it. I don't necessarily advertise it, but it worked.

Payment Processing When the Terminal is Down

So when the credit card machine cannot read the card, for whatever reason, follow these guidelines:

• Make sure the terminal functions properly. Check the connection and all other signs that a fully functional POS terminal normally displays.
• Make sure the card is swiped correctly. Verify that the customer swipes her card the right way and in the right direction.
• Examine the card. If the machine is in order and the card is being swiped correctly, the problem must be with the card itself, so check for signs of alteration.
• If the card is altered, do not complete the transaction. Instead return the card to your customer and request an alternative payment form.
• If there are no signs of alteration, key-enter the information. Sometimes you will have to pay a higher price for accepting payments and this is just such an occasion.
• Take an imprint of the card. Take the card's imprint for all key-entered and voice authorized transactions and place it on the front of the card as a proof that the card was present when the payment was made.

That's it. Again, key-entering transaction information should be your last resort, so always exhaust all other possibilities before doing it.