Future delivery and payment processing

Future delivery is an important situation for some merchants in payment processing. It’s good to know how to deal with it and your payment processing account. In the payment processing industry, future delivery is considered higher risk. Therefore, the underwriting process to get a merchant account is a little more in depth.

To start, future delivery occurs when a customer buys a product or service, but it is not delivered until a future date. For example, in the furniture business, it is common for a customer to pay for furniture, then the furniture is built over a 6 week period, then the furniture is delivered. The furniture is delivered in the future. Another common future delivery industry is the airline industry. A customer buys a ticket, but the service is not delivered until a future date (i.e. the day of travel). There is a common misconception that eCommerce is considered future delivery. eCommerce is not future delivery.

Future delivery is riskier because customers have the ability to dispute a credit card charge, called a chargeback, for six months after they receive the product. If a customer doesn’t receive a service or product for 6 months, it essentially doubles the time period where a customer can conduct a chargeback. That’s more risk for the business and the payment processor.