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Protect Your Business from Chargebacks

No other phrase instills fear and anger into the hearts of merchants like the word, “chargeback.”

What are Chargebacks?
In short, a chargeback is a reversal of funds transferred.

Contrary to a return, which involves a consumer directly approaching a merchant and requesting a refund, a chargeback refunds the consumer via the card issuing bank and the merchant’s bank.

When a customer notices what they suspect to be an incorrect charge on their credit card statement, they may notify their issuing bank to reverse the charge.

Merchant’s not only incur losses due to non payment of services rendered or goods delivered, but also face additional burdens caused by chargebacks. Most card issuing banks assess an administration fee to the merchant for processing the chargeback.

What information is required to dispute a chargeback?
Get a signature.
ALWAYS make sure the consumer signs the sales receipt in card present transactions. As a further precaution, check to make sure the signature is similar to the one on the back of the card. Never accept an unsigned card.

Save receipts.
It is recommended that merchants retain their receipts and records in an organized fashion, so they are able to quickly and accurately provide information upon request.

Have an easy refund policy.
If a consumer is truly unhappy with their purchase, have an easy return policy so the consumer does not feel the need to initiate a chargeback with their provider.  Losing a chargeback can often be more expensive than refunding a purchase.

Set shipping expectations.
Often a consumer will issue a chargeback when they pay for an item but have yet to receive it. As a merchant, make sure all merchandise has shipped before charging a credit card. If a customer doesn’t have an item but sees it on their credit card statement, then they may want to issue a chargeback.

Optimize your billing descriptor.
Often times chargebacks can be a matter of a misunderstanding, specifically because the consumer is unclear about the transaction details that appear on their credit card statement. Be sure to let the consumer know what business name will appear on their statement. If they cannot recognize the name of your business because of a DBA, the consumer may begin the chargeback process.

Provide your company contact info.
Card processing errors can easily be fixed by providing consumers with your contact information, whether on the receipt or on your website, so they can contact you directly and have the error fixed without initiating a chargeback.

Keep clean records.
Many chargebacks are lost by the merchant for lack of providing simple and clean records.  Make sure your sales receipts are complete and legible, so that they can be clearly understood by the consumer as well as valid piece of proof during a chargeback dispute.  A clean receipt should be the first step in fighting a chargeback.

Be quick to respond.
Responding quickly to chargebacks is a merchant’s greatest tool, as there is a certain time limit in each step of the chargeback cycle, and a delayed reaction can result in a chargeback loss.

Too many chargebacks, whether successfully repealed or not, can harm a merchant’s reputation, result in a freeze of their merchant account or a complete terminationof their account altogether.  If you have questions about chargebacks, we’re here to help, contact us at 406-585-7443 and we’ll be glad to answer your questions and concerns.


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