- August 10, 2018
- Posted by: ipaytotal
- Category: Chargebacks, High Risk Merchant Accounts
One of the things that are unavoidable when you’re into selling services or products is the chargeback. Business owners must be wary of chargebacks as these may incur huge losses for the business if chargebacks get out of control. And it can possibly hurt their relationship with card networks.Merchants must take steps to ensure that they only have minimal chargebacks and to be able to prevent and control chargebacks, the reason why it occurs must be understood first together with the common chargeback reason codes and why they are filed.
Chargebacks are disputed transactions of customers on their credit card transactions. The merchant is required to reverse the transaction and to return the customer’s money. Chargebacks are made to protect consumers from unauthorized transaction so that no time is wasted with arguing with suppliers on the transaction’s legitimacy but instead a customer can simply file a chargeback transfer. Sometimes clerical errors caused chargebacks. Bank may also instigate a chargeback without the knowledge or involvement of the cardholder. This happens when there is an anomaly found in the transaction. But regardless of the reasons, merchants must find a way to mitigate it.
Common Chargebacks Reason
1. Incorrect Product or Size Ordered – One of the most common types of product return which can be easily controlled and remedied by making sure that sales staff are knowledgeable of the products and services their store is offering. Giving the customer’s a chance to test out the product before paying for it will benefit the brick and mortar stores. For online retailers, details of the product and services they are selling should include everything one has to know about their product such as clear and accurate product description, pictures taken at different angles, detailed sizing charts and instructions and also customer reviews to help the customers get the right products the first time.
2. Products or Services Does Not Match the Description on Website or Catalog – This type of return shows bad business practice because the product descriptions whether it be online or in print must be detailed and accurate. An extra effort to proofread the description and images must be done. It is necessary to check and double check that all the product descriptions and the images used are right with the correct size, color, and information.
3. Cardholder doesn’t recognize the transaction/Unauthorized mail or telephone transactions – If your business accepts phone orders, it is safer for the merchant to get as much information as they can from the customer. For instance, the customer’s address and the CVV2 of the credit card.
4. Services not rendered or merchandise not received or defective – The common reasons as to why this type of chargeback is filed are as follows.
a. The merchant failed to deliver the products/services.
b. The merchant billed the cardholder before sending the merchandise.
c. The merchant didn’t deliver the items on the agreed upon delivery date.
Customers will file for dispute if they do not receive the services or merchandise they bought. That is the reason it is advisable for merchants to keep records of shipping receipts as well as to track the products they ship.
5. Credit not processed/ invalid credit card or account number – Make sure that your payment system is configured to reject any expired or invalid credit cards. If the system cannot locate a valid account number of the credit card that has been used, a chargeback may incur.
6. Duplicate Processing – System error may cause double charge of a customer’s credit card. A duplicate charge can also be made if the customer has mistakenly pressed the PAY button twice in doing online transaction.
7. Human Error – If an accountant is processing the credit card manually, there is a chance he/she might make an error. Avoid doing the manual processing.
8. Fraudulent Transaction – Deliberate of Criminal fraud contributes to excessive returns. This product return involves using counterfeit money or stolen credit or debit card and returning the product for a refund to get cash. This also involves stolen merchandise.
9. Transaction amount differs from the agreed upon amount.
10. Canceled recurring transaction.
How to Protect your Business from the Risk of Chargeback
- Use a Merchant’s name that your customer can recognize on their credit card billing statement. There are customers who initiate chargebacks when they can’t identify the retailer that appeared in their credit card billings.
- Include your phone number in merchant’s info that appears in the customers’ billing statements. This is for the customers to be able to contact your business directly in case they can’t remember the transaction they made in your business.
- Make sure that the credit card used in doing business with you is not stolen by verifying the address, customer details, phone number, expiry date and even CVV. Orders from countries like Middle East, Asia and most parts of Africa are considered as high-risk.
- Have you refund policy published in your business webpage to clearly indicate as to how a customer can dispute charges for the goods and services that have been provided.
- Ensure that the customers know what they are being charged for and what they can expect by being transparent with the services & products offered as well as the fees involved in the transaction, the expected delivery time, the guarantees or warranties on the merchandise and so on. The product or service description must be concise and easy to understand. If there is a need, video and images can be used to explain potentially confusing aspects.
- Make sure to have the customer sign off on the terms and conditions before completing the transaction.
- Outstanding customer service must be provided to help the customers address all their questions and grievances promptly. Various ways of communication may be offered such as live chat, email, phone and even social media interaction.
- All credits and refunds must be issued promptly.
- The merchant should know that the act of disputing a chargeback whereas illegitimate chargebacks can be reversed especially if they have the necessary evidence to dispute the chargeback such as a signed copy of the terms and conditions whereas the services provided are outlined and also if the services or products were provided successfully.
If you are looking for a reliable merchant account provider, you are in the right place, as IPAYTOTAL provides the best solutions for e-commerce businesses. We guaranty quick real-time credit card processing, top-notch services and at reasonable rates. Give us a call at +44 800 776 5988 or get in touch with us through our website.