People love paying for things with credit cards. Nearly $1.2 billion is generated globally by ecommerce every 30 seconds. Most of these purchases are made with a credit card. In 2013, consumers in the United States spent approximately $4.6 trillion with credit and debit cards. The total amount spent this way was about $8.6 trillion worldwide. If your business sells anything, it is in your best interest to take credit and debit cards payments. You should also consider your plans for merchant chargeback protection.
What is merchant chargeback protection and why do you need it?
A chargeback occurs when a customer disputes a charge on their credit card statement. This can result in the card issuer will deduct the amount of the sale and a fee from the processor. This fee can be anywhere from $15 to $100 per transaction. There are a number of reasons a customer can claim when disputing the charge. They can say they never ordered the item in question, never received it or that they received the wrong item. The number of chargebacks being incurred by merchants is growing due to the increase in ecommerce. Merchant chargeback protection encompasses a range of steps businesses take to avoid chargebacks.
Merchant Chargeback Protection Tips:
- Use the protocols devised by credit card processors. The protocols used by the different credit card processors is different. Make sure you are familiar with their policies and procedures. If you process transactions without the card being physically present, these are called “card not present transactions,” they may require you get permission to do these. MasterCard and Visa have security programs and many processors require you use them. This will just provide an added luster of merchant chargeback protection.
- Be careful when picking your payment descriptor. A lot of problems could be prevented if merchants had clear descriptors. Consumers find a strange name on their credit card statement and dispute a payment that may be legitimate because they do not recognize your business’s name. Make sure your customers know how any charge will appear on their credit card statements.
- Improve your customer service process. If you get a notice about a pending chargeback and associated fee. Contact the customer and see if you can work something out. If there is a problem with a product they bought or service they ordered, talk to the person and see if you can do something to resolve the situation. Do not ignore these notices, then the processor will not find in your favor. Contact the customer as soon as you get the notice.
- Make sure all of your staff know how to process all kinds of credit card transactions. If you process card not present transactions, make sure all of your employees know the protocols that are required by credit card processors for those transactions. Make sure everyone keeps good records of all of your credit card transactions. The more detailed your record keeping is, the better chance you have of fending off chargeback claims.
- Know fraud when you see it. With the rise in ecommerce and chargebacks that accompany it, you can employ merchant chargeback protection policies to limit your liability. Use the most secure processing tools for your credit card transactions. Be on the lookout for fraud. Be suspicious when the billing and shipping addresses are different. If you have a question about a sale, contact the customer. Some merchants use social media sites to verify sales. If someone is buying something as a gift (this explains the different shipping and mailing address), they will appreciate you taking the time to protect them from fraud.
- Fight only the battles you know you can win. Repeated chargebacks will do more harm than just from the money you lose, this can impact your relationship with the merchant account provider. if you really think you can win a fight, then you may want to go for it. You will do your reputation more harm if you fight a bunch of chargebacks and lose all of it but if you are sure you can win, that may help.
You may not be able to prevent all erroneous chargebacks and will lose some money accordingly but you can take steps to minimize the number you get and the damage you incur.