When to charge the customer?

Some merchant accounts might specify when you are "allowed" to charge the customer, but normally, you AUTHORIZE the customer's credit card at the time of purchase for the sale amount (this holds the funds to make sure the customer has enough available credit to pay for the order) and then you FINALIZE (or batch or "mark as shipped") the authorization after you have shipped the merchandise.

This way, you are guaranteed the money for the sale when you DO ship the merchandise, but if you never ship the merchandise, your "authorization" falls off the customers credit card after a while and you don't have to reverse a sale.

I agree, billing the customer when they place the order is customary. It normally takes three days for the funds to be processed and put into your account. And most customer understand that they will be charged when they place the order. Although it may be nicer to charge the customer when you ship, I doubt many customers will notice, and even if they do, I doubt it will make a difference.

Rodney said:

Some merchant accounts might specify when you are "allowed" to charge the customer...

Click to expand...

So true. My contract states that I need to ship merchadise within 24 hours of billing.

Also, if you look at what big stores are doing (cafepress, amazon, etc), they all tend to authorize at the time of sale and charge when the merchandise ships.

Speaking as a customer (and an international customer) I get annoyed when I'm charged on shipping instead of on order placement.

I run a currency conversion at the time of purchase - if I'm charged seven days later the conversion will have changed (and occasionally drastically). I want to know that what I agree to pay when I place the order is what I'll end up paying.

On a local level (i.e. no currency conversion issues), I still want to be charged immediately. If I look in my bank account and see $X, I want to know that I have $X and not $X minus that internet order, oh and that CD I grabbed, and etc.

To put it simply, if you don't take my money when I give it to you I get pissed off.

(obviously the most important thing is that you are within your credit card company's rules though, so always check those before deciding on policy)