In the United States alone, there are 1.06 billion credit cards in use. In fact, card payments are and will remain the biggest contributor to the number of in-store payments. The value of these transactions is set to reach a mind-boggling $1.82 Trillion by 2024. So, credit card receipts are going to form a significant part of the business invoices.
If you are a business owner, you also know that signed receipts can quickly pile up. It may be tempting to clear them out quickly, but you shouldn’t. Then the question arises – how long do you keep credit card receipts? Here is everything business should know about their holding period, proper storage, and disposal. Let’s find out if you are doing it right.
How Long to Keep Customer Credit Card Receipts & Why?
Receipts are “proof of sale”, which leads to the two primary reasons businesses need to retain them. These two reasons also determine the duration for which you should keep the receipts.
1. Fighting Disputed Chargebacks
Expected Holding Period: Up to 18 months
It is common knowledge that banks allow customers to request for chargebacks. A merchant must also know that the window to file for these chargebacks can vary from anywhere between 60 days (2 months) to 540 days (18 months) depending on the issuing bank and the credit card company.
In case of such a dispute, the signed receipts serve as proof that the customer agreed to the purchase. The presence of the receipt proves that you were presented with the card using which you entered all their personal information at your POS terminals. Only then the funds were transferred to the merchant account. Bank can then match the signatures on the receipt to the ones they have on file for their customers. If it’s a match, it serves as evidence that the purchase was made with the card holder’s knowledge.
In light of these facts, false chargeback requests are rejected, resolving the dispute.
2. Support Tax Claims
Expected Holding Period: At least three ye
Receipts are invoices that show that the respective sales took place. In case, your business is audited by the IRS, it is highly likely that you may be asked to produce proof of a specific suspect transaction. IRS requirements may change depending on your place of business and the local tax laws. But, a good practice is to retain the signed receipts for 3 years.
Suppose you are audited and there are no receipts. In that case, it becomes difficult for you to justify the income from select transactions, any information related to them, and the subsequent tax return. In the worst-case scenario, you are looking at a case of tax fraud.
The Curious Case of Credit Card Receipt Storage & Management
Your business understands the significance of storing signed receipts and is ready to commit. But, there are a few things you should keep in mind about credit card receipt storage and management.
1. Store With Care
These receipts need to be stored with caution. Why?
- Protecting Customer Privacy
They are not just “proof of sale”, credit card receipts contain sensitive information about the customer, including their name, last digits of the card number, bank name, and signature. These are private records that have to be protected under the law.
- Avoiding Financial Theft
Apart from the privacy concerns, less than optimal credit card receipt storage can lead to financial information getting shared with unintended recipients. This can expose the customers to financial theft that can cost the merchant long-lasting lawsuits and reputation loss. For a small business that does not have the resources to fight such claims, it may even lead to closure.
2. How to Store & Destroy the Receipts?
There are federal guidelines in place to properly store and destroy receipts since they contain personal and financial information.
The sheer volume and fragile nature of the receipts make them a challenge to store. A merchant should lock them in a cabinet or room. Only authorized personnel have access to these records. Moreover, you have to ensure that the credit card receipt is not damaged due to water, fire, or any other reasons.
To destroy the receipts, businesses should either completely shred or burn the receipts. While it sounds pretty straightforward, it is not easy for a company, especially a small one, to dedicate such resources to monitor one type of transaction. Businesses should keep these in mind before deciding how they want to store their receipts.
For digital storage, businesses have to ensure that the receipts are stored in an encrypted format. Just like physical storage, access to these files must be restricted too.
For disposal, the digital credit card receipt has to be deleted by a program permanently. It is essential to understand that specialized platforms like Wellybox can store all your receipts digitally for years in an encrypted format. Our privacy and security practices have been audited by a Google-approved partner. When you need, Wellybox can destroy all the selected receipts at the touch of a button.
Make Credit Card Receipt Management Simpler
Cards make the sales process extremely convenient. However, businesses usually fail to recognize the equally significant latter part of the payment ecosystem – managing the receipts. With improper storage, you are opening your business to multiple risks, including breach of business information, revenue losses, long legal battles, loss of reputation, and more.
Software solutions like Wellybox make card payments completely stress-free. You can store all your receipts in one place, stop worrying about data protection, instantly produce past receipts, resolve disputes quickly, and destroy them at the touch of a button.
Card payments are only going to increase in frequency and volume with time. So, you can either arrange for bigger storage for your receipts or move over to a smarter no-hassle solution.