Simply put, a chargeback is a transaction in reverse. Rather than putting money into your account, it takes money out. You have to pay a fee for every chargeback, plus, if you get too many, your processing account could be closed.
There are various reasons that a transaction can be disputed and returned through the chargeback process, but most chargebacks occur as a result of fraud. So, if you can reduce fraudulent transactions, you can reduce chargebacks. Here are some steps that may help you to reduce the amount of chargebacks you receive:
For non-pin-based transactions, look at the expiration date and signature panel. If there’s no signature, check the customer’s ID and ask the customer to sign the card. If the customer refuses, don’t accept the card. Always get an authorisation for every transaction by swiping the card or inserting the chip into the terminal. Look at the hologram on the front or back of the card. It should reflect light and appear to move. Chip cards should always be dipped & not swiped. Complete settlements daily as delays can result in a payment dispute.
Since the physical card and cardholder are not present at the point of sale for card-not-present transactions, you should ensure you gather and record as much information as possible from the cardholder before processing a transaction.
Always obtain an authorisation. Ask the customer for the expiration date and include it in your request. If possible, verify the card code – that’s the 3-digit security code located on the back of the card for Visa and MasterCard, or the four-digit number on the front of an American Express card.
If you are still suspicious:
Verify the cardholder’s address using an online maps website.
Verify the cardholder’s phone number by calling it to see if it is connected. Fraudsters often use bogus telephone numbers; a delay in picking up the phone could mean fraudsters are overseas and redirecting calls via the internet.
If you cannot verify the address or phone number, but believe the order is genuine, you can request further identification such as a photocopy of the front and back of the card and a driver’s licence. This ensures the person has the card in their possession. Be on the look-out for images that have been tampered with or that are not a genuine photocopy. Some merchants have reported receiving copies of fake cards; these are often in a JPEG format. Request signed confirmation when delivering products.
Chargebacks can also be the result of double-charging, credit card expiration or customer disputes. To avoid double-charging, be sure to double-check (even triple-check) the amount you are charging, both on the terminal and on the receipt, and always check the expiration date on the receipt.
When it comes to dealing with disputes, the best policy is to keep them to a minimum. Pretty basic, right? To do this, make sure you respond quickly to every customer service request.
Customers aren’t happy when they think they’re being ignored. If they ask for a refund, issue it as quickly as possible. If you don’t, they might think you’re not going to give them a refund and they might call their credit card company, and that can result in a chargeback.
Try publishing your return policy. Put it on a sign near the register and include in on your sales receipts.
And remember, if you use a third party processing company, that company’s name will appear on the customer’s statement, not yours, so let the customers know this to avoid confusion.
For online transactions, your refund policy should be disclosed to customers before the transaction. Merchants should provide a valid “click to accept” disclosure and the policy placed on the same page is in a scroll down format to prove that customer was aware of policy at the time of the transaction.
Finally, if you sell items on the internet, describe the items in as much detail as possible. Pictures and measurements are helpful.
As a general rule, keep as much information about your transaction and your customers as you can, including any emails or other correspondence.
Chargebacks cost you time and they cost you money, and unfortunately, they’re an unavoidable part of doing business. But, if you’re vigilant against fraud, and communicate with your customers, you’ll see fewer of them and you’ll spend less time dealing with the hassles.