Yet another topic that has come up that I figured we might as well chime in on. Pre Authorizations for our Kiosk machines. The question is and still is, "How Much"?
I have mine set at $10.01. I like the 01 because it sometimes gets the folks to call me. I use the phone call as an opportunity to explain the machine and the way it works. Most of the folks I talk to turn out to be really great renters. Some do a full pre-auth and others do a partial. It's a tough deal because some folks don't have much in their accounts... What do you guys do?
Sincerely,
Mike Weiland
http://readydvd.com
Wednesday, December 10, 2008
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This is something I've been kicking around. On one of my kiosks I do a pre-auth of $12.50. I chose 12.50 after I had several occurrences of me being unable to collect. I have moved out of that location and that has not been a problem any more. I also chose 12.50 as a happy medium between full price and $1.00 knowing the pre-auth reserves these funds in someones' account. My understanding was that if the customer did not return the movie within the time frame (15 days) AND the credit card failed authorization for the full purchase price I would be able to at least recoup the 12.50 that was pre-authorized. I found out that after 15 days the pre-auth has already timed-out and I am unable to collect any funds plus I'm out the movie.
Another thing I just found out this week. When a customer returns a movie they could see both the final change and the pre-auth amount on their online bank statement. I talked with support about this issue earlier this week. They had said that a pre-auth gets converted to sale and the pre-auth released if it happens within a short time frame ( I think 24hrs but not sure) otherwise it get approved again but as a sale this time not a pre-auth. Then the original pre-auth would timeout on its own. I've checked this on my own debit card plus a customer called me Monday wanting his 12.50 back. The customer rented a movie Saturday, returned it Sunday and Monday his account had a debit for the rental fee plus the 12.50 pre-auth. I do have signage explaining the pre-auth amount which the customer was OK with but since he returned the movie he wanted the 12.50 ( not that I ever had it, it was just reserved). The timeout period is different from bank to bank too.
I'm currently using a $5.00 partial pre auth. My kiosk charges $1.49 per night rental, so the $5.00 would cover a 3-night rental. I haven't had any issues thus far of not being able to collect. If I did, it would be easier for me to find the culprit as the kiosk is in an apartment complex so the management has the unit number of each of the residents. I'm hesitant to do much more than $5.00 as I don't want to tie up a significant portion of someone's account.
I use one night rental, $1.00, it comes to $1.09 w/tax. Not a problem yet. I had a few go into archive and I take them out and in a few more days they clear. I only have one recent movie sale in pending. I may boost it to around $6.00, this will cover about 5 nights. No point to to go very high if it will time out anyway, as Tom says. Most go into pending for the 2-5 night rentals anyway.
When we first started our business we were only using a $1.00 hold and we had a few people use pre-paid debit cards and we lost about $100 worth of moives but we then have now made it $10 and we have not had any problem. I do get the occasional call from the customer wanting there hold money back and it sometimes takes the bank a few days to return it. But if they do take the movie at least we get some of the money back.
I stated out using the full $30, what a nightmare that turned out to be. Hold $60 out of a customers account for 3-4 days and they get really upset. So then I dropped it to $1 and promptly had 4 DVD's stolen. I settled in on $7 which seem to work fairly well.
One thing I have had happen twice, when a customer uses a coupon FNF and returns it after one night the amount is $0 and I have been told there is no transaction with the CC company, but the $ preauth is still on hold and because there is no transaction the customers bank did not know release the funds. I ended up meeting with the customer 2 weeks later. They showed me their bank statement, it still showed a pending amount with my company name on it. Too make matters worse it happened when I had the $30 preauth. I have also noticed since I raised my preauth up to $7 my merchant fees are slightly less
When I started my pre-auth was $3.00. I lost over $200.00 in the first six months. I raised the pre-auth to $10.00 and then started to get complaints. I lowered my pre-auth back to $3.00. I have recenty moved my kiosk to another location and been open for a week. my pre-auth is still $3.00. I might change it to $6.00 if I start losing money or DVD'S.
My approach was to set expectations with everyone that rents from my machine. I posted a sign that told my authorization amount of $20 and that I recommend using a credit card to rent the movie as they will not see the hold at all and it will not affect their banking account. Each bank is different on how they handle the preauth and how they return the funds. Because I set the expectations up front there have been no complaints and even if there is a movie that is not returned and the sale transaction does not go through I know that I will still make money on the transaction. Most of my customers use their credit cards now and rent out two or three movies at a time keeping them for an average of three to four days.
For those of you that are using 3C's, Curtis asked me today how to capture a PreAuth. Since I don't use 3C's, I told him to call their Support line and get in touch with Mark Rudolph at DVDNow. Here is his e-mail back for all of you.
Curtis has left a new comment on your post "Miscellaneous Questions (anything you can think of...":
Ok here is an update, for those who are using 3C as their gateway.
They have a web page called
web2pay. I just got all set up. This web page allows the kiosk owner to refund transactions and capture the preauth in case of theft or default. It is very easy to use and hopefully it will help me recover a few of my recent loses. To get set up call Palo at 630-288-2754 he is the DVDnow rep for 3C and by far the most helpful person I have talked too.
Mike Thanks for your help today.
Curtis
Quickpick DVD
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