Businesses lose a lot of money every year to chargeback and reverse transactions. In most instances, the cause of the problem will lie in the fact that no obvious record of customer authorization exists.
Industry reports show that worldwide chargeback losses will hit a record $33.8 billion this year. Nearly 98 percent of merchants report facing some type of payment fraud.
Once a customer disputes a charge, all the weight of evidence falls on the business and in this case, without the right paperwork, that is a tough place to be. It is here that credit card authorization form is very important.
This can be a minor administrative measure, but it can be taken as formal evidence that a customer accepts a certain charge.
However, most organizations do not focus on it, or use haphazard ways of gathering it.
What is a credit card authorization form?
A credit card authorization form is a significant document. It enables a company to charge a customer’s card with their written permission. Basically, it is a form of evidence that the cardholder has accepted a certain payment. You can use it for one-time transactions, like a single purchase. It can also handle recurring payments. This includes subscriptions, memberships, and installments.
Most forms have basic details like the cardholder’s name, card information, billing address, and the payment amount or schedule. Many people confuse it with a payment receipt, but it is not the same thing.
In simple words, a receipt is given when confirming that a payment has been made. A credit card authorization form is received in advance. The customer must consent to the business before any charges can be made.
What information is included in a credit card authorization form?
A credit card authorization form records all the most important details needed to facilitate the processing of payment with the cardholder’s approval. It makes sure that both the business and the customer agree on what is billed, how often, and that it is authorized.
Although the format can be different, the following is the key information on most credit card authorization forms:
- Cardholders’ full name and billing address must be provided to verify the identity of the individual making the payment.
- The form should include Credit card details: Card number, expiration date, and CVV.
- Approved value and payment terms must be included:
- The amount to be charged.
- Whether it is a one-time payment or a recurring payment.
- The signature of the cardholder and the date serve as consent and confirmation of the authorization.
- Business name and contact information must be included to know who is billing their card and how to contact them in case of need.
What are the different types of credit card authorization forms?
Credit Card Authorization forms are usually categorized by payment type, such as a one-time charge payment and a repeated bill payment. Selecting the right type is important. It establishes a clear intention regarding how and how often the card will be charged.
1. One-time authorization forms.
Customers use one-time authorization forms to provide permission for a single, specific transaction. These are usually for one-time purchases, hotel bookings, event tickets, or professional services. The form specifies the amount that the user must authorize and limits it to that specific charge. Once you make a payment, the system fulfills the authorization, and you cannot reuse it.
2. Recurring or subscription authorization forms
Recurring or subscription authorization forms are for ongoing payments, like subscriptions or memberships. They outline how often they will bill you—weekly, monthly, or yearly—and the set amount for each payment. In case when needed, the term and termination of the agreement are also specified. Such disclosure is a guarantee to the cardholder that they have agreed to ongoing billing. These authorizations stay active until canceled, terminated, or expired. Businesses need to add clear billing cycles and include renewal and revocation terms to avoid conflicts.
Do credit card authorization forms protect businesses from chargebacks?
Yes, Credit card authorization forms can be effective in terms of chargeback prevention. Only when they are filled, stored safely, and backed by clear transaction details.
A signed credit card authorization is a document in which the cardholder authorizes the charge. This form can be given to the Bank or Card network for any claims about Unauthorised Transactions. It shows proof of the Customer’s previous approval.
And just the collection of a signature is not enough. The strength of such evidence is consequent to the strength of the form and its adherence to the conforming standards. And this is where PCI compliance comes in.
PCI DSS (Payment Card Industry Data Security Standard) is a set of security rules. Visa and MasterCard created these rules to protect consumer credit card information. It describes how to store and retrieve secured information (card numbers, CVV, etc.).
It has been estimated that only one out of 32 organizations is fully compliant with PCI DSS. When a business keeps authorization forms with full card details, it raises the risk of data breaches. Ignoring these standards makes it worse.
At the same time, paper-based authorization forms have a practical shortcoming. They are either lost, damaged, or hard to find when a chargeback must be disputed within a short timeframe. Written information can be vague or even intended to leave out some information. Also, signatures are, at times, debatable or even falsified. In these instances, the form cannot be considered good evidence.
Due to these loopholes, a lot of companies are transitioning to digital processes of authorization.
Digital forms are easier to access during conflicts. They might also add extra verification features. These can include time stamps, computer logs, and password protection. This not only makes them more convenient, but also more effective in terms of prevention and redressing of chargebacks.
How do you fill out a credit card authorization form?
To complete a credit card authorization form, it is always better to do it as a step-by-step procedure to prevent mistakes and complete the payment without any issues:
Step 1: Enter the cardholder’s details
Enter the entire name as written on the credit card. Include the billing address, phone number, and email address as required.
Step 2: Enter the card details.
Write in the card type (Visa, Mastercard, etc.), card number,r and expiration date. Go over all the digits again. Little errors here are among the most frequent failures in transactions.
Step 3: Enter the details of payment.
Mention the authorized amount clearly and what you are paying (such as a one-time purchase, subscription, or advance deposit). When it is a recurring charge, add the frequency and period as well.
Step 4: Add authorization terms (if applicable)
Overview of any conditions regarding refunds, cancellations, or recurring billing. Be sure that the cardholder reads and accepts these and then continues.
Step 5: Sign and date the form
The cardholder is required to sign and date the form in order to officially authorize the transaction. In the absence of this, the form might not be valid should there arise any disputes.
Step 6: Submit the form securely
The form should be sent via a secure medium- this can be an encrypted upload portal or a compliant payment system. Do not use plain email or messaging applications to send sensitive card information.
What not to do:
Do not keep the CVVs once the payment is handled, and never use unsecured methods of distributing card information. Such practices may compromise security requirements and subject the business and the customer to the risk of fraud.
How can businesses manage credit card authorizations more efficiently?
Many companies still rely on paper or PDF credit card authorization. This method often causes more friction than efficiency over time. Forms are usually incomplete, information can be vague, and the teams waste time making follow-ups. Handling sensitive card information in emails or shared files increases compliance and security risks.
The problem is clear in corporate travel. Teams handle payments at various hotels and suppliers. They typically have to deal with a large number of authorizations, rather than a few and it is not very easy to track and store manually.
To cope with this, corporations are slowly shifting to centralized workflows that are digital. Platforms like ITILITE enable organizations to handle authorizations on a single platform. This cuts down on back-and-forth messages. It captures info in a similar format. Also, it makes records easier to access when needed.
Now, a messy and slow process is organized, safer, and can grow easily.
Tired of chasing credit card authorization forms? ITILITE automates the entire authorization process for your corporate travel program, from hotel bookings to vendor payments. See how it works.
