Chargebacks: Reminders and What you need to know…

**A demand by a credit-card provider for a retailer to make good the loss on a fraudulent or disputed transaction. **

Simple as that…or not so much. Most merchants will, at some point, experience a chargeback from one of their customers. In simplest terms, this action is a dispute of products sold or services rendered made by a customer with their card issuing bank. The bank can then force a reversal of the transaction from the merchant and return the sales amount to the customer.

The purpose of the chargeback system is to protect the consumer. If a customer is unsatisfied with a transaction, they may simply call their credit card company and request a chargeback. Once the dispute process is initiated, it is up to the merchant to provide proof that services were properly rendered. As well as possibly losing out on the sales amount, the merchant is typically charged a chargeback fee by their processor (usually ranging from $15 -$50), which may even exceed the amount of the initial sale. Some merchant services providers will work with their merchants to help with the chargeback fees, but not all.

Once a merchant has received a dispute and complied with the request for additional information to refute the claim, the card issuer will make a final decision. The issuer will either deem the chargeback valid and the transaction amount is permanently removed from the merchant’s bank, or invalid and the sales amount is posted back to the merchant. For this reason, it is imperative that merchants work to reduce the risks of chargebacks by ensuring proper customer service and retaining necessary transaction details and supporting documentation.

Avoiding Chargebacks
• Verify the name of your business is the name the customer will see and recognize on receipts and invoices.
• Respond to retrieval requests promptly, providing all required information. Typically, the business will have two weeks to respond and submit supporting documents upon receiving a retrieval request.
• Make sure your customer is aware that you are charging them. This seems very simple but is one of the primary reasons merchants receive chargebacks.
• If retail, be sure to retain proof that the card and customer were present. Verify additional identification, compare the signature on the card with the signature on the receipt, and do not accept a card without a signature.
• If a card is declined, do not go above and beyond to get approval. Simply ask for another form of payment.
• If using a virtual terminal or phone order, be sure to use and receive Address Verification (AVS) to confirm the billing address matches the card.
• Provide invoices with up to date business information with a customer service number. This will eliminate simple mix-ups.

• One of the most important tips we would like to share: When shipping expensive items, be sure to ascertain proof of delivery, preferably to the billing address and by the cardholder. This can help protect the business from fraudulent orders that could result in major financial burdens.

Excessive chargebacks can prove detrimental to any business, including lost sales and major fees. Large fines may be levied against the business, as well as the revocation of the ability to process payments entirely with credit or debit cards. The Merchant Store takes chargebacks very seriously by keeping our merchants informed, fighting on behalf of our merchants, and taking care of chargeback fees when necessary. We firmly believe it is our job to keep our merchants protected and informed. If your processor is failing to do so, please feel free to contact our team. We are here and happy to help! Contact 1-800-937-3850 or info@usmsi.com.