Payment Processing: Batch vs. Real Time

Evaluate if the time spent on the exception processing is too costly for your operations. Some merchants develop a policy that simply declines transactions without chasing down customers. In the physical goods world, merchants don’t always need an authorization in real time, since their goods will not ship until an authorization is in place. But they must consider the risk of losing the sale all together if the customer doesn’t return following a declined transaction.

Real-time authorizations may address the need for better exception handling by not letting the customer go until an authorization is complete. For example, if an online customer attempts to use a credit card for which the address doesn’t match, real-time authorizations allow you to ask for a different address or another form of payment before hanging up or losing contact with that customer. However, real-time transactions also set up a chain of operational considerations (see below).

* Are you prepared to handle real-time inventory, shipping and delivery dates for customers? You may be convinced that real time is the best option to combat fraud or address authorization exceptions. But before making that decision, consider some of the operational issues that may prevent implementing a cost-effective, real-time authorization environment.

Once real-time authorizations are in place, you must be able to give the customer the final transaction cost (e.g., shipping, delivery dates). However, many merchants employ legacy systems that don’t have the capability to accommodate real-time inventory, and changing over systems can be a costly and time-consuming venture.

As part of your ongoing strategic plans to update hardware and software, determine the ideal time to invest in new systems that allow real-time tracking and authorization. Be sure you understand what your real costs will be, not only for hardware and software but also to operationally change the way orders are processed and sales and customer service reps are trained.