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The Business of Chargebacks
If you’ve been in business for more than a day, odds are, you’ve had to deal with the occasional chargeback. This happens for any number of reasons, but bottom line is the charge is reversed, in effect, canceling your sale and sometimes sending profits down the drain.
While technology has propelled the merchant card services industry ahead, it’s important to realize chargebacks initially existed to protect customers from mistakes due to humans. There were no automation methods, so therefore, a business owner relied on the quick math he did in his head or a small calculator. Inaccuracies were more common then. In contemporary day, a chargeback can result for any number of reasons, including theft and fraud and even double charges. These usually become time consuming and can even result in investigations. This means even if the chargeback is not proved, your money is still tied up until it’s resolved. So how can business owners reduce the risks of chargebacks? A proactive approach will take you a lot further than a reactive one. Here are a few suggestions:
- Train your staff to check identification and ensure the receipts are signed before the customer leaves the store.
- Be sure to get phone numbers.
- Institute a universal credit card processing procedure and train your employees in what’s expected.
- If you accept online credit card processing requests, make it a policy to not ship until the payment has cleared.
- Finally, be sure to have an organized way of maintaining documentation. This is important for the purposes of potential chargebacks, but there are compliance issues, as well.
No one wants to spend time dealing with chargebacks and though the occasional error happens, these simple steps can keep your merchant credit card processing network running smoothly. Remember, the FDIS customer care team is always available to provide assistance should you need it.
