Have I been charged twice?

So what was the most popular email I got from my customers during the holiday rush? Well, it was an email that went a little something like this:

Hey, you guys charged my credit card twice for the same order! I want the second charge reversed immediately or I’ll…

Have you gotten that one yet? Of course, most are much more polite, but some go on to threaten calling their credit card company and the BBB. I tell you, I must have gotten this email fifty times or more in December alone. Here is the interesting part; I didn’t double charge one single customer. Not one. So why all the emails? Let’s take a look.

How credit cards work

We first need to understand how credit cards work. When a customer enters their information on your site, the system sends for an authorization. Basically, it’s alerting the credit card company that there is a charge coming, making sure that there is room on the card for the transaction, and checking the billing address information. You’ll be alerted if the billing address doesn’t match, or if the authorization is declined for any other reason. The credit card company, in turn, leaves a temporary “charge” on the account, to hold the money while waiting for the actual charge. Keep in mind that no money has changed hands at this point. All that’s happened so far is the retailer’s system has said “Hey credit card, we’ve got a charge coming for $50, everything look good on your end?” And the credit card; “Yeah, looks good here, we’ll hold it for you, let us know.”

At this point, you as the retailer will complete the sale, and at the end of the day, your credit card batch will process. The credit card company will then see that an actual charge has gone through, and will move the temporary charge to an actual charge. This is when the money actually moves. All banks are different, but each will keep the temporary charge open for a set amount of business days. If a real transaction never comes through (due to the order being canceled or something) they will delete the temporary charge off the system. No harm done. Follow me so far?

Why does my customer think they’re being charged twice?

Most customers do not understand the difference between a temporary transaction, and a real transaction. Most of the time when a customer says they’ve been charged twice, it’s actually true that the card has been authorized twice. Now I’m not a banking expert, so I won’t pretend to know all the reasons that this happens, because I’m sure there are tons. One of the big reasons is that the original authorization came back with a billing address problem (AVS mismatch). So you corrected the billing address, and tried again. Resulting in two authorizations. Again, there are a million scenarios where more than one authorization could post. The point is that they are temporary.

When the credit card company sees that you’ve sent in one “real” transaction for that card, they should delete the extra authorization off the account.

How to respond

This didn’t used to be a problem. Before everyone had online access to their credit card statement, people used to look only at their paper statement. Well, the paper statement only shows real transactions. It doesn’t show pending authorizations, like they do online. So when you get this customer email, a little education is usually all that’s needed.

I send an email like this:

Mr/Mrs. Customer,

Thanks for your note about the double charge on your credit card. We only show one charge in our system for your order. Your bank just authorized the charge twice (they both probably say something like “pending”). Nothing to worry about, it happens all the time. Once they see that we only charged your card once (which won’t happen until tonight), they’ll delete the other authorization off the system. Hope that helps.

Conclusion

Customers don’t always know the ins and outs of the business world. Truthfully, before you were a merchant, you didn’t know much about it either. People get really touchy when it comes to money. But a quick message that explains what has happened usually takes care of it.

3 Responses to “Have I been charged twice?”

1. Bloggers Digest - 2/22/08 - Get Elastic Ecommerce Blog Says:
   February 22nd, 2008 at 6:46 pm

   [...] Justin Consuegra from Drop Ship Digest explains why you might get an email like “Hey, you guys charged my credit card twice for the same order! I want the second charge reversed immediately or I’ll…,” and what you can do about it. [...]

2. jim jones Says:
   April 17th, 2008 at 11:38 am

   Thats all so wonderful. BUT what if by accident an actual double charge occurs? Then merchants like your self will not listen to the consumer, thinking that they already know what is going on. Then a problem arises.

3. Justin Says:
   April 17th, 2008 at 4:34 pm

   I agree, there sometimes is confusion when it does really happen. But I think it’s unfair to say that we don’t listen. When I get these emails, it’s usually right after the order was placed. It is impossible at that point to know if a real double charge happened or not.

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