Understanding Chargebacks and How to Handle Them

What Merchants Should Know to Better Protect Themselves Against Chargebacks

Merchants operating online and in-store both deal with chargebacks. What is a chargeback? It’s a reversal of charges after a purchase; the merchant’s account returns payment to the customer. Credit card purchases are the most popular form of chargebacks, along with debit card transactions, payments through services like PayPal, and electronic bank drafts. Every merchant handles chargebacks at some point, but there are different reasons why. However, merchants can take steps to keep their business protected.

Reasons for Chargebacks

Chargebacks happen for a number of reasons. Find the cause of the chargeback to better protect yourself in the future. You may get notice because the customer was charged more than once or the charge wasn’t recognized. The wrong goods were delivered or were never delivered. The customer received damaged goods or they didn’t meet quality standards. The merchant didn’t process a refund or there were technical difficulties during the checkout process. Regardless of the why, merchants should take chargebacks seriously and handle them in a timely manner.

How They Affect Your Business

While chargebacks may be common among merchants who accept credit card payments, it by no means makes them inconsequential. The merchant loses time, money, and inventory when dealing with a chargeback. With frequent chargebacks, the merchant’s reputation can become damaged. Too many consistent chargebacks may have payment networks looking more closely into the merchant’s account and may decide to close the account or add on a higher reserve. Merchants will also be subject to penalties when hit with a chargeback.

How to Prevent Chargebacks

Chargebacks will happen, but merchants can implement different strategies to decrease the number of potential issues. Having a clear refund policy can help eliminate the need some customers may feel to start the chargeback process. Merchants dealing with card-present transactions should never accept expired cards and always get a signature and check it against the signature on the back of the card. Unsigned cards shouldn’t be accepted by any merchant. Aside from these practices, merchants can also follow the appropriate protocols, including not re-swiping denied cards, recording information on authorization calls, and entering transactions once.

TOTAL-APPS Built-In Chargeback Protection

With a merchant account from TOTAL-APPS, chargebacks are no longer a top worry. TOTAL-APPS offer proprietary services to help reduce and manage business-critical issues like chargebacks and fraud. Our team of dedicated account managers consistently update merchants on the latest strategies to reduce risk, saving your business time and money to maximize profits.

Contact TOTAL-APPS today to protect your business from chargebacks.