Credit Card Processing Blog
What Is A Chargeback?
With all the fraud and scamming, merchants need to take the most care of their customers by properly handling their money and purchases. As a business owner, your goal is to keep your customers satisfied while making sure your business is financially secure. You want to avoid fines and losses that can occur over corrupt transactions such as a chargeback. Chargebacks occur when a cardholder is trying to eliminate a charge that was made on their card. This can hurt you because you can lose the dollar amount of the sale and more.
There are a few common reasons why chargebacks can be issued.
- A cardholder doesn’t recognize a charge they found on their statement. This doesn’t mean you’ve done anything wrong, but you will still have to take the loss.
- If a customer receives a damaged or broken item, or they returned something and did not get a refund.
- When the customer’s card information was stolen and used without their consent.
- If the customer never receives the product, or the product is not as advertised.
These are just some common reasons. So how do merchants avoid these headaches? The simplest way for chargebacks to be avoided is for the merchant to learn and adopt the best methods for card acceptance and to ensure employees adhere to them. Some of these methods are:
- Employees checking photo IDs if the card isn’t signed.
- Ensuring the authorization amount is the exact transaction amount.
- Consumers providing a signature confirming they are aware of why they are being charged and when.
- Issuing refunds on the same method of payment the consumer used.
- Being recognizable on statements.
- Providing excellent, fast customer service.
However, for online orders, the merchants cannot see the card. Here are some warning signs to consider when conducting card-not-present transactions:
- New shoppers
- Rushed shipping
- Larger than usual orders
- Shipping to international addresses
- Transactions with similar account numbers
- Multiple transactions within short time spans on the same card
- Multiple cards used with one IP address
You can easily avoid chargebacks by being up to par with all measures of security. Most importantly, if a customer is unhappy, make sure you are quick and willing to help them.