Best Practices to Prevent Chargebacks on Credit Card Processing
Posted by Jeff Shavitz on Mon, Aug 24, 2009 @ 02:43 PM
Merchant account chargebacks are an increasingly expensive problem not only because of the fees charged by the processor, but also because of the time and energy that a merchant must invest to try to win a dispute. A thorough chargeback prevention plan can help limit the number of chargebacks that your business receives. Below are some tips and best practices for preventing 3 common types of chargebacks:
Preventing customer-related chargeback issues:
Use a recognizable DBA name - if the DBA is not easily recognizable to a cardholder on their statement, they may not recognize the charge and may issue a chargeback.
Include a phone number on cardholder statements - this ensures that cardholders can easily contact you with any questions regarding a charge.
Clearly post policies - make sure that policies such as returns and damaged merchandise are clearly visible and easy to understand.
Work with customers to resolve issues - it sounds simple but if you don't communicate with customers to resolve issues, you're forcing them to resort to a chargeback to solve their problem.
Proactively communicate with customers - keep customers informed on the status of their orders. Many customers won't bother to contact you if an order doesn't arrive on time, instead they may issue a chargeback.
Preventing chargebacks from processing errors:
Use address verification service (AVS) for not-present transactions - never process a card-not present transaction without an AVS match.
Swipe all card-present transactions or get a fully legible manual imprint.
Don't re-run a decline transaction - if a credit card is declined, don't run it again. Instead, ask the customer for another card or form of payment.
Never split transactions - always authorize a credit card once for the total amount of the transaction. If you accidentally undercharge, cancel the transaction and run another transaction for the entire payment.
Clear credit card batches daily - posting transactions to your customers' accounts quickly while the purchase is still fresh in memory lowers the chance that they won't recognize the charge and issue a chargeback.
Preventing fraudulent chargebacks (for card-present transactions):
Obtain and compare signatures - if a customer's signature on the receipt is significantly different than the one on the back of the card (or if the card is not signed at all) the transaction may be fraudulent.
Verify the number on the credit card machine matches the card - after obtaining an authorization, make sure that the number displayed on the machine matches the number on the card.
For more information on how to prevent chargebacks, you can also check with your processor, review the VISA and MasterCard websites and also look at resource sites like CardFellow for more great information.
Courtesy of MerchantCouncil.Org
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