How Merchants can Avoid Chargebacks
If a customer files a complaint against a merchant and asks for a chargeback, it is always bad news for the merchant because even if the complaint is found to be false and the chargeback is not issued, the merchant is still forced to pay the processing fee. Call it injustice or anything else, but there’s really no way out except one – you’ve to take preemptive steps.
There have bee
n an increasing number of cases where people have tried to use chargebacks to fraud the merchants and even if unsuccessful, these chargebacks are not a good proposition for the merchant.
Here are 10 steps merchants can take to avoid chargebacks.
- If you are card present (CP) merchant, make sure to swipe the card through your magnetic card reader and complete the transaction only after proper authorization is received.
- Obtain a signature from the customer on the sales slip without which you can be liable to “no signature” chargeback if the customer later refuses to accept that he was present at the time of sale.
- In case of embossed cards, if the authorization cannot be made or the magnetic strip cannot be read for some reason, you can key in the card information and use a manual imprinter to emboss the card number on to the sales receipt.
- If the card is not embossed and is printed instead, don’t key in the information if the authorization fails because there is no way to ascertain the presence of the card. Instead ask for some other form of payment like cash or check.
- Make sure your policies about refund and returns are disclosed to the customer in a clear fashion. Failure to disclose your policies or to use misleading information in adverts can lead to chargebacks.
- If you are a card not present merchant, such as an online retailer or service provider, use address verification and obtain the CVV2 code on all transactions.
- Don’t deposit the transaction before shipping the product. If the customer sees a charge against their account for something they haven’t received yet, it could lead to problems and eventual chargebacks.
- Deal with all customer complaints about the products or services, quickly and professionally according to your policies. It is better to refund the customer directly or replace the product entirely instead of facing chargebacks.
- If there is a delay in shipping or if the item purchased is out of stock, let the customer know immediately and give them an option of either cancelling the order or purchasing a similar product at the same price. Do not ship some other product without letting the customer choose.
- Beware of unusual orders and customer behavior and actively protect yourself from chargeback frauds by knowing the reasons that a customer can file a chargeback for.
If merchants can keep these 10 points in mind, they’ll avoid a lot of unnecessary chargebacks and the accompanying headaches and stress. For more information on how it is possible to reduce the total cost of acquiring a low or high risk merchant account and subsequent payment processing fees, you can contact an AMLSV expert.