Choice Tips To Help You Prevent Chargebacks
Here at Choice, not only do we offer merchant services, but we also want to educate our customers about the risks of chargebacks. There are many reasons to avoid chargebacks, but there are two reasons that stand out as the most important.
The first is because the financial cost is sometimes tremendous. Not only are you responsible to pay back the full amount of the transaction, but also a chargeback fee. Overdraft fees may also come into play if your account is overdrawn due to a chargeback.
The second reason to avoid chargebacks is because you are risking the loss of your merchant account. After an increased number of chargebacks, your merchant processing company will recognize the pattern and may drop you as a customer, which will put you in the high risk merchant category.
Below is a list of helpful tips that will help you manage and avoid chargebacks:
- Follow Processor Procedure. Every processor has its own procedures when it comes to accepting payments. For card present purchases, be sure to check the expiration date and and security code. Your processor may need to give you permission to process card not present transactions, such as e-commerce or over the phone transactions and may also need to require a digital signature or proof of delivery when you ship their products.
- Use a clear merchant name. The payment name is also referred to as the payment descriptor. This is the name that appears on your customer’s credit card or bank statements. If you list a name, such as a parent company name, other than the business specific name where the transaction occurred, you are at a higher risk to receive chargebacks.
- Get it in writing. If you are a service based business, it is wise to have customers agree to and sign a contract outlining what services will be provided. The goal is to get your customer’s authorization in writing.
- Deal with customer service issues as quickly as possible. Most credit card processors will send chargeback notifications, which are a great tool if you can respond to a customer’s dispute quickly. Heading off chargebacks with good customer service will save a lot of money, time and frustration on the business’ end in the long run.
- Learn how to spot fraud. Pay attention to suspicious details such as credit card security codes being incorrect or if the billing and shipping address don’t match during an online transaction. This way, you can reach out to the customer and make sure that they are making legitimate purchases.
- Educate your employees. Training employees in how to deal with both card present and card not present transactions can be crucial to your business. Teaching them to spot suspicious transactions, making sure they verify signatures and obtain signatures on contracts can help prevent chargebacks from happening.
- Keep your transaction records. At a minimum, keep records of the transaction dates, amounts and authorization information. Signed documentation or contracts are also documents that should be kept as well. Depending on the credit card company with whom your customer is filling the dispute, chargebacks can occur up to 180 days after the original transaction date.
- Fight back with Choice Merchant Solutions Chargeback Dispute Center. Each chargeback can cost an additional fee and can destroy the good relationship you have with your merchant processor. If additional chargebacks incur, your merchant processor has the may drop you as a customer, which will most likely put you in a high risk bracket. You may not want to devote the time and resources to fight every chargeback, but it may be worth pursuing. If managing your chargebacks is overwhelming, consider the specialists at Choice Merchant Credit Card Dispute Center to help fight for you.