When accepting credit card payments, chargebacks can be costly to your business operations. Chargebacks occur when the cardholder or the card issuer is disputing a transaction. Most common reasons for chargebacks are: cancelled subscriptions, returned merchandise, fraud, or even mistakes or keying errors.
Retrievals are when the cardholder or card issuer on the behalf of cardholder is requesting more information or transaction receipt for a transaction they may not recognize.
Here are things to look out for and tips for you as the merchant to minimize your risk of chargebacks:
- Keep a record of a legible sales draft
- Make sure transactions are identifiable to the cardholder
- Cardholders may not recognize your doing business as name on their statement, make sure they are aware of the business name that will appear on their statement for your charge.
- Respond to retrieval requests in a timely manner
- Make sure to clearly outline your return, cancellation and refund policies for customers
- For ecommerce transaction, have an "I agree" checkbox at the checkout
- For card present - have these clearly printed on the receipt
- Outline installment / recurring terms and intervals to cardholders
- Take prompt action when a recurring customer requests to cancel
- Try to resolve issues with cardholders directly and keep a record of any interaction
- Process refunds in a timely manner
- Process refunds on the same card that was used for the original sale
- If unable to swipe card, obtain a manual imprint with customer's signature, transaction date, auth code, purchase amount and merchant info.
- Perform due diligence on larger transactions - verify name on card matches ID.
- For delivered goods - obtain signed proof of delivery
- Do not reattempt declined transactions
- Watch for cardholder tampering with terminal during transaction or pulling out and keying in a card number
Transactions where the card is not present, such as MOTO (Mail Order/ Telephone Order) and ecommerce (Internet) are more susceptible to chargebacks.
- Keep a database of problem customers
- Watch out for multiple orders or big orders from 1st time customers
- Process one transaction at a time to avoid accidental duplicates
- Perform end of day balance of your deposits / batch totals to ensure no duplicates or keying errors
- For multiple purchases from same cardholder in a single day, prepare separate invoices describing each purchase
- Set fraud prevention rules / filters to limit number of orders by hour, day, week from a specific customer.
- Perform Address Verification (AVS) to verify if cardholder's address matches card issuer's database
- Be sure to require CVV when processing a transaction
If you are suspicious of a card transaction, call the voice authorization center 866-508-5855 and request a "Code 10," where you will be asked yes/no questions and provided with guidance if to proceed with the transaction.
Cartis Payments offers additional tools to reduce, and even prevent chargebacks: