Chargeback Management and Prevention
What you don’t know could cost you
“Chargeback” is the term given to a disputed payment on a customer’s credit card. This can happen when one of your customers refuses to accept responsibility for a charge, but it may also occur when the issuing bank identifies a technical issue, such as when they don’t receive an authorization approval code.
Typical reasons for chargebacks include:
- A customer says they did not receive a product or service.
- A customer’s credit card was used without their consent.
- A customer doesn’t recognize a charge on the credit card statement.
- A customer believes the product or service was defective, damaged or did not live up to the description.
Whatever the reason for chargebacks occurring, they can cause you headaches and cost you money, so as a business owner it is in your best interest to avoid them.
Our Online Chargeback Management System keeps you up to date with notifications of any chargebacks that may occur, and our online tools let you respond to them quickly.
Preventing Chargebacks
Your staff are your first line of defense, so establish best practice with everyone working at the point of sale. Every member of your team should know that refunds must always be processed back to the card number they originated from, and never to offer refunds by cash or check. If credit is due on multiple sales, deal with each one individually.
What to Expect
Who is involved:
- The customer.
- The customer’s issuing bank.
- The payment brand, such as Visa or American Express.
- The acquirer/processor.
- You, the merchant.
The steps:
- When a cardholder doesn’t recognize a charge on their credit card statement they begin by disputing it, but the records you keep can help you. Customers can be forgetful, so showing them copy documentation, and any other evidence you can find may jog their memory enough that they do not proceed.
- If the issuing bank thinks that a customer of yours has a reasonable claim, they will issue a temporary payment to them, and to cover this, the amount will be debited from your merchant account.
- You will receive an email, fax, or physical mail notification to let you know about this chargeback.
- By submitting the required documentation in time, you can successfully challenge the chargeback, and the funds will be returned to you. If not, you will lose them.