A credit card / ACH authorization form is a document that gives merchants permission to charge a customer’s credit card or bank account without their presence. The document, once signed by the customer, helps companies avoid chargebacks (as the customer’s legal signature makes it very difficult for them to argue the charge is fraudulent). The document can be used for both one-time and recurring transactions.
- Recommended for memberships/subscriptions that renew on a daily, weekly, or monthly basis.
- Helps to reduce the number of chargebacks a company receives.
One (1) Time Credit Card Payment Authorization Form – for receiving the approval to charge a customer’s credit card ONCE.
Recurring Credit Card Payment Authorization Form – used for obtaining consent from a customer to charge their card on a recurring basis.
One (1) Time ACH (Bank) Payment Authorization Form – gives a merchant the one-time right to withdraw from a customer’s checking or savings account.
Recurring ACH (Bank) Payment Authorization Form – provides a merchant with the ability to withdraw from a customer’s bank account on a weekly, monthly, or quarterly basis.
To sufficiently protect the issuing company from a chargeback, the form should contain the following (at a minimum):
- Name of the merchant (company);
- The amount ($) of the charge;
- Whether the charge is one-time or recurring;
- The day of the week, month, year, etc that the charge will reoccur (if applicable); and
- The reason for the payment.
- Customer name (first + last);
- Billing address; and
- Phone # / Email (optional, but recommended).
- Whether payment will be made via credit card or bank (ACH);
- If by credit card:
- The type of card (VISA, AMEX, Mastercard, etc.);
- The card number (#);
- Expiration date (mm/yy);
- CVV (3-4 digits); and
- Cardholder ZIP.
- If via bank (ACH) withdrawals:
- The account type (savings or checking);
- The name of the person on the account (customer name);
- The name of the bank;
- The bank’s routing number (9 digits); and
- The customer’s account number.
- The signed name of the customer (can be handwritten or signed via eSign);
- The date (mm/dd/yyyy) the customer signed the authorization; and
- The customer’s full printed name.
Once the customer opts to sign up for a membership or subscription with the merchant, they should be given the authorization form to complete. The merchant can pre-fill certain information, such as the contact info of the merchant, the amount ($) of the charge, whether it is recurring or not, and the day of the week/month the charge will reoccur (if applicable). If the merchant will be using the form on a day-to-day basis, it is recommended that they keep a “template” version of the form to make copies from.
To make a template, the merchant will need to fill in all of the fields that will remain the same from customer to customer. Then, the merchant will only need to make a copy of the template for each future customer.
Once all other fields have been complete, the customer will need to input their payment method (credit card or bank info), followed by their signed name. Their signature can be collected by uploading the authorization form to eSign, or by printing the document and writing it by hand.
With the completed authorization in hand, the merchant can begin charging the customer’s credit card or withdrawing from their bank account. It is very important the merchant stick to the amount ($) as written on the form. If a charge is made in a greater or lesser amount than is specified on the document, the merchant will not be protected from the customer initiating a chargeback.
The form should be stored for at least three (3) months after the customer has been charged for the last time. For example, if the customer canceled their subscription, the merchant should keep their authorization form on file for at least ninety (90) days after their last payment.
The authorization can last indefinitely until the customer cancels their subscription or membership.
The form should be stored for a minimum of thirty (30) days after the customer was last charged. To play it safe, it’s suggested that merchants hold onto the form for ninety (90) days.
No, while they are a great tool for limiting chargebacks and helping transactions progress smoothly, they are not mandated by state or federal law.
Step 1 – Customer + Merchant Info
At the top of the form, the following will need to be completed:
- Type/write the full name of the customer (the person authorizing the charge);
- Type the name of the merchant (can be the name of a company or of a person);
- Check the box next to the payment method that will be used (CC or ACH); and
- Write the amount ($) the customer will be charged (repeatedly or one-time).
Step 2 – Transaction Type
Next, the frequency of billing will need to be selected. If the merchant will only be charging the customer one-time, the first (top) option should be selected. If the merchant will be charging the customer’s card (or withdrawing from ACH) on a regular basis (such as monthly), the lower (bottom) option should be selected.
- If recurring, enter the day of the week/month/year the merchant will be making the charge. Then, place a checkmark next to the timeframe they will be charging the customer.
Step 3 – Billing Information
This section pertains to the customer. The following will need to be entered:
- The full billing address of the customer (should match the CC billing address, if applicable);
- The customer’s phone number (optional, but recommended); and
- The customer’s email address (also optional, but highly recommended).
Step 4 – Payment Info
Place a checkmark next to the payment method the customer will be using.
- If “Credit Card” is selected, complete the following:
- Select the type of credit card (VISA, Mastercard, etc.);
- Type/write the full card number;
- Write the expiration date (mm/yy);
- Enter the CVV number; and
- Enter the customer’s seven (7) digit ZIP code.
- If “Bank (ACH)” is selected, complete the following:
- Place a checkmark next to the account type (savings or checking);
- Write the name of the person that owns the account (customer name);
- Write the name of the bank that the account is with;
- Type/write the bank’s routing number; and
- Enter the customer’s account number.
Step 5 – Customer Signature
Once the form has been completed in full, the customer will need to sign. This is a required step for making the form legally binding. The customer will need to write the following:
- Their signature (by hand or by using eSign);
- The date (mm/dd/yyyy) they wrote their signature; and
- Their full printed name.