Most charge back issues arise at the time of the transaction and most can be prevented. A chargeback occurs when the amount of the original charge that was credited to your business checking account is reversed. Chargebacks happen for a variety of reasons and can cost merchants a lot of time and money.
Some of the common reasons for chargebacks include: fraudulent cards, cardholder disputes the quality or receipt of merchandise, the amount charged to the card was incorrect and errors were made during the transaction. The best way for merchants to protect themselves is to obtain “card present”, swiped transactions with electronic authorizations and cardholder verified matching signatures.
Many of these tips are pretty common sense and you probably already do them, but just in case…here is a basic list of things to do to prevent chargebacks.
1. Get a signature. Compare the signature to the back of the card. Check additional identification if necessary.
2. Make sure that the business that will appear on the cardholder’s statement is a name that your customers will recognize. Many chargebacks start when a customer does not recognize a charge on their statement even though it may be legitimate.
3. Do not complete a transaction if the authorization request was declined. Do not continue to try and get an authorization. Instead you should request a new form of payment from the cardholder.
4. Be clear about your refund and return policies. Make sure that the conditions of the sale are written on the receipt near the customer’s signature and that they receive a copy of that receipt. Also display your refund and return policy near the check out or easily available on your website.
5. Get an imprint whenever a card has to be manually keyed into a terminal. Be sure that all of the transaction information shows up on the imprinted copy including the amount, business name and location, and the cardholder’s signature.
6. Get an authorization number — do not break the sale into several smaller amounts.
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