Merchant account chargebacks are a dreaded event for any business that accepts credit or debit cards. Chargebacks are basically transactions that are disputed by cardholders, resulting in a reversal of original amount that was credited to your business. They are expensive, time consuming, subject to fraud and just downright annoying.
Chargebacks are not the same as refunds that are initiated on your end when, for example, a customer returns a product. Rather, chargebacks are initiated through the credit card issuer because the customer has challenged the charge or filed some kind of complaint.
The burden of proof usually falls to the merchant – to you. Credit card companies want to keep their customers happy, so they generally give them the benefit of any doubt on chargebacks. But not only do you lose the sale, you might lose the merchandise as well (or the time and expense providing a service) – plus pay a penalty (chargeback fee).
Many chargebacks can be prevented if you follow the right approach. Here are steps you can take:
• Seek feedback. Encourage customers to contact you first with any question or dispute. That means making it easy for them to find your phone number, email address, website or other contact information. The idea is to prevent calls going to the credit card issuer.
• Verify by email. For online or phone orders, always send a confirming email to the customer to verify. If the email bounces, or the customer won’t provide an email address, that’s a red flag. Confirming emails further reinforce your business name in the customer’s mind.
• Be nimble, be quick. Whatever you do, do it fast. Send notices immediately, ship goods on time, perform authorizations and process credit cards on the spot and respond to any and all disputes quickly.
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PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.