A credit card authorization form is a formal document that a customer signs to approve a charge to their credit card. Merchants use credit card authorization forms as documented proof to validate credit card transactions. Essentially, it states that the cardholder agrees to the charges set forth by the merchant. Credit card authorization forms are often used for recurring payments and card-not-present transactions.
A free credit card authorization form template is included below. You can also download it as a Word document.
What to Include in a Credit Card Authorization Form
Every credit card authorization form needs to include the following information:
- Cardholder name
- Card number
- Card type (MasterCard, Visa, American Express, Discover, etc.)
- Expiration date
- Cardholder’s billing ZIP code
- Merchant name
- A statement that authorizes the charge(s)
- Cardholder signature and signing date
Other optional information includes:
- CVV security code
- Cardholder’s full billing address
- Cardholder’s phone number
- Customer ID number
- Merchant address
- Merchant phone number
- Merchant logo
- Purchase amount
- Details of purchase
- Date of purchase
- Invoice and/or purchase order number
- Any additional terms and conditions
More information offers businesses more security and validation, but bear in mind how collecting this information may impact the customer experience. While someone buying a car may be willing to provide all of this information, it may be overkill for a smaller purchase.
When You Need a Credit Card Authorization Form
A credit card authorization form essentially keeps a card on file, so you can process transactions without requiring customer permission each and every time. You can use credit card authorization forms in hard copy or digitally. For in-person transactions such as someone signing up for a membership at a gym or health club, it’s a good idea to have several hard copies available.
For transactions that don’t happen in person, you can mail a physical copy or email a digital copy of the credit card authorization form so the customer can fill it out and send it back on their own time. They can print it out and sign or sign digitally with a tool like DocuSign or HelloSign.
Now, small business technology is becoming advanced to the point where you can offer digital credit card authorization forms in person too. If you have tablets set up at your place of business, customers can easily fill out the forms that way.
Credit card authorization forms come in handy in a few key scenarios.
Recurring payments are required for subscription-based businesses, memberships, and things like utilities and bills. In a recurring payment business model, customers have to make regular payments to businesses. However, this means they have to remember to make those payments.
When you have a credit card authorization form, you can use language that permits you to charge the customer’s card without requiring their permission each time. Usually, some form of automation is involved through your point-of-sale (POS), invoicing, or payment software, and this helps ensure you receive the payments on time.
Card-not-present (CNP) transactions happen when the physical credit card and the cardholder aren’t there at the time and place of the transaction. As such, these transactions are more susceptible to fraud. This is important because businesses around the world lost $27.85 billion to fraud in 2018, a number that continues to climb.
A credit card authorization form serves as an extra form of proof for CNP transactions. So in the case you do fight fraud or chargeback, you have proof of authorization to help make your case.
B2B payments are typically a little different from B2C transactions. Payment preferences vary, and more businesses opt for “traditional” payment methods. Though paper checks and ACH deposits are most popular, they’re declining and losing ground to credit cards—the third most common B2B payment method.
Credit card authorization forms are especially handy for B2B payments. A few use cases include:
- Pre-authorization for company lunches, so anyone can place an order and/or pick it up for the team
- Bills sent via mail, such as electric, internet, business insurance, etc.
- Software-as-a-Service (SaaS) subscriptions
Chargebacks happen when your business charges a credit card and the cardholder tells their issuing bank that the charge was not authorized and should therefore be refunded.
It’s in every business’s best interest to avoid chargebacks. They cost an average of $450 per incident, for starters. And if you get too many, your business accounts and financial reputation could be at stake. You could get the boot from your merchant account and hurt your chance at future loan approvals.
When you use a credit card authorization form, just like in the case of fraud for CNP transactions, it helps validate the legitimacy of the charge. In other words, you’re more likely to win the case and keep the money—though unfortunately there’s no way to get your time back. A credit card authorization form may also deter customers from pursuing chargebacks in the first place.
Free Credit Card Authorization Form Template
A credit card authorization form might sound unnecessary, but it can come in handy when fighting fraud and chargebacks. This simple step can be the difference between a won or lost chargeback dispute.
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