Charge backs are unfortunately part of accepting credit cards and no business likes dealing with chargebacks, but they are a fact of life that getting out ahead of can help save you money.
Before we talk about how to avoid chargebacks, Lets take a moment to talk about what a chargeback is.
What is a chargeback?
A Chargeback happens when a card holder contacts the issuing bank and disputes the charges made. As a result, a reversal of the charges is made of the original transaction and funds are pulled from the merchant and put in a holding account while the dispute is investigated.
Merchants are typically notified by mail of the chargeback by there merchant processor and have a limited number of days to dispute the claim.
Why do issuing banks allow this?
There are a number of consumer protection laws that have come about over many years to help protect card holders who legitimately have experience fraud, unfair billing practices, or because a product did not meet the description of what the card holder received.
How to avoid chargebacks?
The first step is to use EMV devices, many charge backs happen because of claims of fraud. When cards just had a magnetic strip is was easy to duplicate the information that was on the magnetic strip and copy this over to a blank card. But EMV cards also have a chip embedded in them and this chip provides additional authentication that the card itself is real to the merchant processor and issuing bank. Many charge back attempts are stop right up front when the card holder still has the original card but is claiming fraud. The fact that EMV was used to run the card proves the card is not a duplicate and so claims of fraud can be stopped upfront.
Address customer concerns when they happen. Lots of chargebacks are done because the card holder is unhappy about service or quality. Unhappy guest not only hurt your business by telling others about there negative experience but when they do a chargeback because of avoidable service or quality issues, it cost the business direct funds too.
Print contact information on guest checks. This sounds like a simple thing, but guest may not find a manager or be too embarrassed to speak up, they may do a chargeback instead of looking for alternatives. Often times having the company name and phone number clearly on the guest check will give a guest and outlet to resolve a matter rather than feeling like they have no alternatives.
Train your staff to check ID’s for cards just like they check id for alcohol. Actual fraud can be caught easily and save you a great deal of money simply by asking for id upfront when taking cards.
Follow the guidelines setup by card brans. Each major card band has created a best practices list and although most overlap, reviewing their guidelines will help you understand why chargebacks happen.
What can you do when a chargeback happens?
In short Fight it!! Aldelo Pay merchants can use the “Dispute Resolution Portal” making addressing chargebacks simpler than ever. Once you login you can see the chargeback, see the reason given and provide a response and even upload supporting documents if needed.
Fighting a charge back does not cost you anything, Where losing cost you the amount of the sale!