17 Ways To Reduce Chargebacks In Your Business

For merchants, chargebacks can be costly for asignificantly minimize disputes and charge backs.
business. You lose both the dollar amount of the6. Ask to see a customer's id when accepting a credit
transaction and the related merchandise. You alsocard. When the customer presents the card to you,
incur your own internal costs for processing themake it a habit to look at the expiry date and ask for
chargeback which can range from $10 - $35 perid.
chargeback. If chargebacks become a regular7. Describe your business clearly and make sure your
occurrence for your business, you could seriously riskcustomers know what business name will appear on
losing your merchant account.their credit card statement. For example, if you have
A chargeback reverses a sales transaction in threean online business, on the payment form it should read:
steps. First, the card issuer subtracts the transaction"This charge will appear as ABC Widgets, Inc."
dollar amount from the cardholder's credit card8. Obtain cardholder signature. Card present
account, receives a credit and is no longer financiallytransactions require the cardholder's signature. Train
responsible for the dollar amount of the transaction.your employees not to give the customer their credit
Next, the card issuer debits the merchant bank for thecard or goods before the receipt is signed.
dollar amount of the transaction. Lastly, the merchant9. Don't deposit transactions before you ship the
bank deducts the transaction dollar amount from themerchandise. If a customer reviews their credit card
merchant's account. The merchant loses the dollarstatement and notices a transaction for product they
amount of the transaction.have yet to receive, in most cases they will dispute it.
Let's say for example, you sold your product to 510. Keep your customers informed. If merchandise to
customers online or offline in two days for $300 each.be provided to the cardholder will be delayed, advise
A month goes by and after two months, you receivethe customer in writing of the delay and the new
an email from your credit card processor saying thatdelivery date. You may even supply the tracking
you received 3 chargeback's, reason FRAUD. Younumber.
just received the money transferred to your bank11. Check the IP Address. If you are an online merchant,
checking account from the credit card processor andit is very important that each order processed through
now you have to pay it all back in the following fees:your website keeps track of the IP address of the
1. Original fee: $300 x 3 = $900person placing the order. The IP address is a unique
2. Transaction fee: 5% of $300) x 3 = $45.network identification issued by an Internet Service
3. Chargeback Penalty fee: $25 x 3 = $75Provider.
TOTAL: $102012. If your business delivers products, use a carrier that
To avoid that from happening to you, implement therequires a signature on delivery, and allows you to
following 17 strategies in your business to reducehave a copy of the signature. Keep it for your records
chargebacks against your merchant account:in case of a chargeback dispute.
1. Purchase merchant chargeback insurance.13. Be wary of International orders. These are very
Chargeback insurance can provide protection againsthigh risk transactions because there is no system in
cardholder fraud on "Card Not Present" credit cardplace for verifying international orders. The Address
transactions when: A lost or stolen credit card is usedVerification Service is limited to credit card transactions
before the card owner detects it is missing; Identitywithin the United States.
theft takes place and is assumed by thieves; A valid14. Deposit sales receipts as soon as possible. 1 - 5
transaction has been made by the real card owner,days is standard. A chargeback can occur due to a
but thieves hack into a site's customer service screenlate deposit.
to gain access to that customer's information15. Be careful not to deposit duplicate transactions. Do
necessary to have products shipped directly to themnot run the same transaction through the POS terminal
instead of the real customer. It will reimburse themore than once or deposit the same transaction more
merchant for the cost of the stolen product orthan once.
services, the loss of profit, and the charge back16. For websites, make sure you provide a toll free
processing cost.phone number for customers to call, so they can
2. Refunds. Whenever a claim for a refund is made,hopefully resolve problems prior to instituting a dispute
and it has any merit - give the customer the refund.via the card company. On your website you should
This will significantly reduce chargebacks.create a 'frequently asked questions' section to further
3. Make sure your system uses the Addressclarify issues that might otherwise lead to a complaint.
Verification System. This system is designed for fraud17. When selling over the Internet, place a warning on
protection. It compares the billing information providedyour transaction webpage stating that your site
to the address and zip code on file at the issuing bank.employs safeguards against fraud.
4. Verify CVC2 and CVV2. VISA reported thatMost chargebacks occur because of fraudulent
making customers supply the CVC2 and CVV2transactions. The 17 strategies are ideal solutions for
verification numbers (the 3 digits on the back of theprotecting your business and customers from fraud.
credit card) reduced charge backs by 26%.Most importantly they will help merchants to reduce
5. A 30 day money back guarantee or return policy willchargebacks from occurring.