How to Prevent Chargebacks

A chargeback involves a card holder disputing a charge that has been made to his or her credit card. Chargeback reasons include damaged or never received merchandise, fraudulent charges made with a stolen credit card, or a charge on a credit card statement that is either incorrect or not recognized by the card holder. For merchants, a chargeback means returning funds to the customer, in addition to paying fines and possibly losing customers’ trust and returning business.

Although some chargebacks may be inevitable for any merchant accepting credit cards for business, there are several precautions you can take to prevent them.

• Do not complete transactions if the credit card has been declined. Instead, ask for another form of payment, such as a different credit card, a debit card or cash.
• Always obtain a signature during card-present transactions. Chargebacks can be issued for “no signature,” in which the customer denies authorizing the transaction.
• Deliver products before depositing transactions. Customers can dispute a charge on their credit card made before receiving their merchandise. Charge customers after you receive proof of delivery.
• Be careful when entering transactions. Duplicate charges are a common reason for chargebacks. An advanced payment gateway has safeguards which check for duplicate charges. In addition, make sure cashiers are careful not to make the same transaction twice.
• Void incorrect sales receipts. This ensures incorrect or cancelled transactions are not completed.
• Respond immediately to cancellations of recurring billing requests. If a customer wants to cancel their recurring payments, be sure to take action right away and let the customer know when the cancellation is complete.
• Deposit sales receipts in a timely manner. Failure to do so can result in “late presentment” chargebacks.
• Make your return policies clear. Business policies regarding returns, refunds, exchanges and cancellations should be easily and readily accessible to your customers. Online transactions should be followed up with email receipts and online payment confirmations. This avoids any confusion later.
• Keep your customers in the know. Maintain constant communication and updates with your customers, letting them know when deliveries are delayed. Always be available for questions or support. If a customer disputes a charge, respond quickly with as much information as you can.
• Comply with PCI standards. If a chargeback occurs because you accepted stolen credit card information, your business is held fully accountable. By complying with PCI standards, you can help keep your customers’ sensitive data safe and protect your business.

BluePay is a leading authority in fast, easy and secure credit card processing solutions. To learn more about our merchant account services, contact us today!