Minimize Credit Card Chargebacks
Chargebacks can be crippling for business. A credit card chargeback occurs when a buyer contacts their credit card issuer to dispute a charge that appears on their credit card statement. There are several reasons why a consumer may choose to dispute a charge.
Common Reasons Consumers May Dispute a Charge:
- The customer claims that the purchase wasn’t authorized or wasn’t completed at all. This is often followed up by a fraud investigation or claim, and credit card companies often side with the consumer in the event of a borderline case.
- The item purchased or the service rendered wasn’t delivered as promised. These types of credit card chargebacks are dangerous for a business as they not only induce potential chargebacks, but they can also create negative interactions between the business and the customer base.
- The client was charged an incorrect amount or was charged multiple times for one purchase. This is often attributed to keystroke errors at point-of-sale, or communication issues between the customer and the merchant.
- The customer doesn’t remember making the purchase or doesn’t recognize a line item on the credit card statement. Often times the customer truly did authorize the purchase, but they may not remember completing the transaction. It is important for business owners to keep paper records in addition to electronic journals in the event that a client doesn’t remember making a purchase.
- Fraudulent activity was detected on the account and the account owner was able to call it in within a reasonable period of time. The credit card company can then create a chargeback situation if the business that swiped the card didn’t conduct the transaction appropriately.
For merchants of all kinds, a credit card chargeback can cause cash flow, accounting or inventory issues – and even potentially erode relationships with customers.
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There are certain measures you can take to help reduce and/or eliminate chargebacks:
- Offer PIN debit payment options — By encouraging customers to use their PIN code, you’ll minimize the likelihood of fraudulent debit card activity. PIN codes make life difficult for those who want to commit fraud, as a fake ID and a reasonable facsimile of a signature are often all it takes for a criminal to use a stolen credit card.
- Accept checks — Checks provide a unique set of security issues that must be managed appropriately (don’t worry – we offer check processing services that can help minimize check-based losses), but they are immune to many of the issues that are inherent to debit and credit cards.
- Make sure each customer signs their credit card receipt — Something as simple as a signature on the credit card receipt is often proof enough that the customer was physically there completing the purchase. A missing signature is a surefire way to validate a credit card chargeback claim and create a loss situation for your business.
- Check and verify ID with credit card transactions — Take the time to thoroughly ID each customer who uses a credit card. Most clients appreciate the concern, and you’ll minimize the propensity for chargebacks by ensuring that only those who are entitled to use the credit card are actually doing so!
- Attempt to directly settle any disputes with the customer, and take good notes on the transaction and your interactions with the customer. Most customers are quite reasonable, some simply may have forgotten about a transaction, and there is significant relationship building that can go along with helping a customer to settle a dispute in a calm and collected manner.
- In most disputes, you keep money for your product or service rendered while the banks deal with customers who dispute chargebacks.
You work hard for every dollar that comes in, and every dollar counts. With National Funding, you get not only a simple and effective system of detailed record keeping that dramatically reduces credit card chargebacks but also a team of experienced professionals dedicated to protecting your business.