10 Ways to Reduce Your Risk of Chargebacks

credit-card-fraudChargebacks can occur for several reasons including cardholder disputes, processing errors, fraud, unfulfilled retrieval requests, and authorization problems. Whatever the cause, chargebacks are frustrating because they can cause you money. While they can’t be totally avoided, you can reduce the chances of them happening by taking appropriate precautions. Here are 10 ways to reduce your risk of chargebacks:

1. Understand How Payment Processing Works
Understanding the procedures and steps of credit card processing will increase your awareness of what to do, what not to do, and what to look out for when accepting credit cards. However, some chargebacks could be the fault of the cardholder, bank, or processor.

2. Hold The Card
Hold the card in your hand to examine the expiration date and to compare the signature on the back of the card to the signature on the sales receipt. Do not accept unsigned or expired cards. In addition, ask to see the customer’s identification to compare names.

3. Do Not Process Declined Authorizations
Processing a declined authorization will be a red flag to the bank, and the customer will most likely open a dispute because they wouldn’t recognize the transaction.

4. Have a Clear Return Policy
Whether you’re offering a money back guarantee, or if all sales are final, you must clearly disclose your policy to your customer before the transaction. This will prevent any confusion and complaints in the future.

5. Be Punctual
Submit all credit and debit card payments for processing in a timely fashion. This will prevent a charge from showing up on a customer’s statement well after the purchase- at a time they may have already forgotten about it. In addition, answer retrieval requests as-soon-as-possible.

6. Don’t Duplicate Transactions
Each transaction should be submitted for settlement only once.

7. Card Not Present Transactions
When accepting card not present transactions, use the security features that are provided including address verification and the card validation code.

8. Require Signature for Shipments
Undelivered product claims are one of the biggest problems online retailers face. You can avoid this problem by purchasing a form of delivery confirmation from your carrier. That way, you’ll have proof when a customer opens a dispute.

9. Keep Records
Keeping good records increases your chances of winning a credit card dispute. Keep records of all correspondence including emails, orders, receipts, and phone calls.

10. Uniformity
Make sure the customer will be able to recognize your company on their statement. If your company’s name is Hal’s Furniture, but it appears on a customer’s statement as HFDG Enterprises, the customer may not know it’s you.

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