It’s Tuesday, September 18, 2018. Time is 2pm in the afternoon. A client walks into a retail shop to buy merchandise. Purchase is concluded and it’s time to pay. Client brings out her ATM Card and motions for the POS device. Cashier hands over the POS device to the customer after inserting the ATM card into POS device along with the transaction amount. After few minutes, transaction indicates successful and Customer copy of transaction printout is printed. This copy shows “transaction approved. Cashier prints the second copy, the Merchant’s copy and the printout shows “transaction declined”. W-H-A-T?? What happened? Devil at work again!! Money is lost?? Or received?? End of Day (EoD) performed on POS device used for the transaction and it indicates that that particular transaction is “Approved”! So, who’s to blame? What actually went wrong? When and how will this money resolve into the merchant’s account if ever it will? Questions and many more questions to ask!
Above scenario played out recently in my client’s shop and I happened to be present at the time. This is one of many ways that merchants lose money to failed POS transaction.
Merchants (Sellers) lose lots of money on a daily basis when using POS devices to take payments for products sold or services rendered. These challenges are occasioned by the banks, telecoms networks and all the other e-payment solutions providers involved in the POS settlement process.
Organizations and entities involved in the POS settlement value chain include Payment Gateways (in cases of in-shop card present and card-not-present transactions), Payment Terminal Service Aggregators (e.g.NIBSS), Payment Terminal Service Providers (PTSPs e.g Global Accelerex), the merchant and the merchant’s staff operating the POS machines/devices.
The “DO NOT REFUND ANY CASH TO A CUSTOMER DURING A FAILED POS TRANSACTION OR YOU WILL LOSE YOUR MONEY” “advice” by Nigerian banks to merchants is now a cliché. The truth however, is that the core challenges of using POS systems to receive payments go beyond just “advice” to actually threaten the already lean financial resources of most merchants. For example, we just received direct debits in our accounts (not charge-back claims this time) from two different Nigerian banks in the past two weeks regarding POS “credits” that the banks claim were credited to our company last year May(2017) precisely and another earlier this year(2018). All investigation efforts to trace the details of the “earlier credits” are so far not yielding any fruits! Now, that’s for us and probably few other merchants who actively watch their email correspondences (this is usually the first means that banks contact you in these cases) and bank accounts; the questions to ask are:
- What happens to the many other micro merchants who use POS systems, who have no email accounts and cannot afford a consultant who can monitor their POS transactions for them? (Note: In many cases, we have witnessed customers being referred back us by their banks for refund of funds charged during unsuccessful POS transactions)!
- How do merchants recover their monies in situations where a POS transaction failed and there is no evidence in the merchant’s records (including POS Viewer records) that such a transaction took place and yet there is a charge back claim?
Ten (10) key reasons why many merchants lose their monies during POS transaction include:
- Insufficient financial resources to hire consultants to help with the revenue assurance, reconciliation and claims process on a consistent basis: Ensure you do not give cash refunds to customers once a transaction fails
- Inadequately skilled employees who are able to monitor and reconcile these transactions on a daily basis
- Lack of time by the owner to monitor and reconcile POS transactions(where the business has just the owner, that is an owner-manager
- Inadequate skill by the owner to monitor and verify that transactions consummated previously, actually get deposited into the merchant’s account(in an owner-manager situation)
- Poor training/education by the banks and other financial intermediaries involved in the POS transaction chain. This also affects bank employees; there are many cases where bank employees (customer services personnel especially) refer their customers back to the merchants to “go and collect their money”, from the merchants claiming that the merchant “has” the money! And this is done without any verification and in total disregard to approved POS dispute resolution procedure!
- Bulked or lumped deposit of POS transactions by banks (Note; Nigerian Banks do not credit your bank with individual POS transaction rather they will bulk-credit your bank 24 hours or 72 hours after the transaction occurred.
- Error by the merchant’s employee/sales staff when performing the POS transaction e.g. not paying attention to details and inputting an amount far less than the actual amount of the purchase; shaking or tampering with the card/device while processing leading to signal disconnection, loss or other error
- Mistakes by your bank when crediting your account with your POS sales proceeds. Banks actually use Excel-based spreadsheets and manual intervention in crediting the merchant’s accounts.
- Absence of an active email address that is linked to your POS linked account. Note that in cases of POS charge-back claims, banks will always notify you via the email address that is connected to your account. This email address must always be actively monitored for such emails to ensure that you respond to the claim within the allowed time frame or lose your money
- Faulty or poorly maintained POS device/machine
Being able to monitor and reconcile your POS transactions, on a daily basis, both in-house and in your various bank accounts, is the surest way to guarantee revenue assurance of your organization. Ensure you have an active email account, visit your email account many times in a day and respond promptly to charge back claims from banks; maintain a good record keeping culture where all your POS transaction tickets by all your sales staff are aggregated, reconciled or “balanced” daily. Additionally, maintain a strong and close relationship with your bank account officer. By doing these as a merchant, POS related losses will be greatly minimized if not completely obliterated from your account. This way, you can and will secure your funds.