Dear Merchants, Keep Your ReceiptsPAI – Apr 1st, 2013
As a merchant who accepts credit cards, you may be overwhelmed with signed receipts. You may know that you need to keep these receipts, but not why or how for long. The answers to these questions are simple, but contain valuable information that all merchants should know and be aware of. Discover why and how long you should keep receipts and then reflect on your own business practices. You may find that you need to adjust how long you keep receipts, or start keeping receipts if you're not already.
While you're reviewing your current practices, you may want to learn about merchant solutions and best practices for PCI Compliance. Both of these topics have valuable information that can keep your business running efficiently and safely.
Why Should A Merchant Keep Receipts?
Merchants should keep receipts signed by their customers for two main reasons: to fight chargebacks and for tax purposes. Both of these reasons are things all business owners must address, so it's important that they have the tools and accurate information to handle them.
Chargeback Claims: A chargeback is when a customer disputes a charge that shows up on their credit card statement. The reason for the chargeback could be anything from fraud to incorrect products or services. As a merchant your only recourse for the chargeback is proof that the customer signed a receipt. Keeping receipts for a period of time after the transaction gives you the ability to fight against any chargeback claims. The bank will use the receipt you provide to match the signature with the one they have on file. If the signatures match, it is proof the customer knowingly purchased the product or service, and you won't be responsible for refunding their money.
Taxes: Receipts can also be used as proof that a certain amount of money went in or out of your business. If your accountant discovers any discrepancies when he's working on your taxes, receipts can sometimes be the deciding factor. Each merchant will have a unique set of requirements based on their location and tax laws, so consult your accountant for best practices for your specific business.
How Long Should Merchants Keep Receipts?
The amount of time you keep signed receipts varies depending on why you're keeping them.
Chargeback Claims: Customers can only dispute a charge up to 18 months after it appears on their credit card statement. Once 18 months have passed, the customer can no longer initiate a chargeback claim and it is safe for you to throw the receipt away.
Taxes: If taxes are your concern, talking to your accountant will provide you the best and most accurate answers. The IRS recommends that you keep the receipts for at least 3 years, but many accountants will recommend keeping them for even longer, such as 7 to 10 years.
No matter what kind of business you have, it's crucial to know and understand why its so important to keep signed receipts. Receipts you have on file may be your only way to prevent losing significant amounts of money.
Tags: [Merchant Solutions] – [Credit and Debit Cards]
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