A “chargeback” means that a customer’s payment transaction that was previously authorized and cleared is later reversed. A payment reversal will result from a dispute raised by the customer or their bank, and the full payment amount plus chargeback fees will be withdrawn from your merchant bank account. If a customer believes that they did not get the goods or the service they paid for, or that what was provided was not what was promised, then they can initiate a dispute and ask for their payment to be reversed. Or, a customer could dispute the amount charged and claim it is incorrect. A customer can also claim that they do not recognize the payment at all.
In business, there are bound to be disputes from time to time, but there are measures that you can take to minimize chargebacks.
Five Steps that will Limit Chargebacks:
- Train your staff
Your merchant account service provider will train you on how to use your card payment processing system, and you must make sure that your staff knows how to use this equipment without making mistakes. Ensure that your staff are involved, trained and up to date on card processing protocols. Your time and resources are limited; let staff take responsibility so that your business does not lose money.
- It Never hurts to Double-check
Check cards before they are swiped, and pay attention to the details printed on the card like the expiration date. Ensure that you have the customer’s details captured correctly for records purposes with the customer’s contact number and delivery address all correct so that you can deliver to the correct address, and so that you can follow up if necessary.
- Use a recognizable billing descriptor
The billing descriptor is the name of your business as it appears on your customers’ statements. Make sure you choose a clear billing descriptor that your customers recognize. You choose the name when you open a merchant account, so choose a name that is the same as, or similar to your trading name. If customers don’t recognize the charge on their statement, they can dispute it resulting in unnecessary chargebacks and additional charges to your bank account. Note that this means that it is very important when signing up for your merchant account that you make sure that you will get to use your company’s name (and not the name of your payment solution) appears as the billing descriptor.
- Make your terms and conditions clear
Have your customers agree to your terms and conditions and let them sign contracts or order confirmations. If you trade in a face-to-face environment, make sure your invoices have detailed terms of service and supply printed on them to protect you in the event of a dispute. Make sure that your return policy is clearly visible on your website or in your place of business (even if that policy is “no returns”).
- Consider offering a refund
Even if your customer has agreed to a no returns policy, it may nonetheless be worthwhile to offer a refund rather than go through the chargeback process. Keep your emotions out of the decision, and choose the option that is most cost effective for your business.
What about fraud?
Unfortunately, no business is immune from the attention of fraudsters, but if you remain aware that fraud is a reality you can stop fraud before you are swindled. Be vigilant in looking out for suspicious customer behavior or transactions and make sure your staff does the same. Check all sales transactions, and if you are in doubt ask. As long as you are not engaging in racial profiling or exercising other unacceptable prejudices, your customers will generally appreciate your concern, and fraudsters will beat a hasty retreat before you have lost anything.
For more information about chargeback fees, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.