Occasional chargebacks are an unfortunate reality for many businesses, but they don’t have to be a regular occurrence.
A credit or debit card chargeback means that a customer payment transaction that was previously authorized and cleared but is later reversed. The reversal relates to a dispute raised by the customer or their bank, and the full payment amount plus charges are withdrawn from the merchant’s (your) bank account. Some chargebacks are service related, for example, if the customer believes the merchant did not provide the service or the goods, or what was provided was insufficient. In other cases, the customer could dispute the amount billed and deducted, was incorrect or that they do not recognize the payment.
Taking action to avoid regular chargebacks is possible.
Follow these steps:
- Follow your merchant account service provider’s protocols carefully: If you trade in a card-present environment, check the card before it’s swiped, paying attention to the details printed on the card. If you trade in a card-not-present environment, ensure that you have the customer’s details captured correctly for records purposes.
- Keep accurate records: have customers agree to terms of services and supply using signed contracts, or order confirmations. In a face-to-face sales environment, Publish your terms of service clearly on your website, which can protect you in the event of a dispute.
- Choose a clear billing descriptor: that is the name of the merchant (you) that appears on your customers’ statements. This is the name that you choose when you open a merchant account. Make sure your customers can recognize it. If customers don’t recognize the charge on their statement, they may dispute it because they don’t know where it came from, resulting in an unnecessary chargeback and additional charges to your bank account.
- Speak to your customers: use all mediums to communicate with your customers. Make sure your contact details are displayed on all transaction documents, and that other information is conveyed immediately, such as your billing descriptor if it does not tie in well with your business name. Put it in print so that your customers recognize your business when they see the charge on their statement.
- Follow up on your merchant account service provider’s communications: most services providers will advise you in advance if there is a disputed transaction that is going to be reversed. Don’t ignore the communication until the transaction is reversed. Respond immediately and find out what it is about. You can most likely remedy it before it elevates to a chargeback.
- Keep your staff trained: don’t take all the information from your merchant account service provider and keep it to yourself. Get your staff involved, trained and up to date on card processing protocols. You can’t be everywhere at once, and you also don’t want to lose money. Solid staff training will prevent chargebacks with card-present and card-not-present transactions. Informed staff are responsible staff.
For more information on how to avoid chargebacks, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.