Picture the scene:

You’re excited because it’s a big sale, so you’re eager to make the process as pleasant as possible for the customer. Unfortunately, for whatever reason you can’t seem to connect with your credit card processor at that moment. You’re swiping the customer’s card and you just can’t connect to get the card authorized. What do you do?

There are a growing number of payments providers out there who are celebrating the fact that they can process credit card transactions in ‘offline mode’, i.e. without any kind of data connectivity. I’ve run several stores over the years and I’ve lost business because of connectivity issues, so I know first hand how detrimental a failure to accept cards can be. But the idea that this kind of ‘credit card offline mode’ is some quick fix to this problem is just misleading.

To return to the example above. Let’s say, you have a payments system that lets you take credit cards when offline. You swipe the card, ‘take the payment’, and send the customer off with a car full of your inventory. Only it turns out the card wasn’t valid, or the customer charged the amount back, denying they carried out the transaction. Now you are stuck with the loss, or at best in a fight with your payments processor who is demanding proof that the transaction occurred. This is not a fun position to be in.

To put it clearly, it is potentially dangerous for your business to accept credit card transactions without a real-time authorization from the processor. If you don’t receive a real-time authorization then the transaction must eventually be processed later to get the funds. If the card declines when it is finally processed, the merchant is out the money after giving over the product.

SEE ALSO: Small Business Credit Card Processors — Here’s What to Ask

So, Offline Credit Card Processing is Bad, Right?

Well, as with so many things, it’s just not that straightforward. In general, small business owners should avoid offline credit card processing for the reasons outlined above. That being said, there are occasions when accepting offline credit card transactions might be worth the risk.