6 Ways to Avoid Credit Card Chargebacks

Chargebacks can happen to any merchant accepting credit card payments. They can be a true headache, as we pointed out earlier, since chargebacks don’t only result from fraud. Even when they are a clerical or technical error, they still can be costly. Merchants lose not only the transaction amount, but they are also subject to fines and fees.

Luckily, there are ways merchants can defend themselves. Here are six options that can help a business avoid chargebacks.

Use a recognizable name

Make sure that your name appears clearly on billing statements and receipts. Use the name you’ve branded your company with, even if it differs from the legal name. Customers won’t recognize the legal name and may get confused. This can lead to chargebacks.

Train employees on reason codes

In our other blog post, Merchant Tips for Chargebacks, we mentioned that there are four categories chargebacks can fall under: technical, clerical, quality, and fraud. These categories are associated with reason codes (which vary between banks and issuers). Get to know these reason codes – and train your entire staff on them.

Be transparent with offers and claims

Set your sights on realistic offers that you can truly back up. If you offer free trials, ensure that there is an easy out for customers that don’t want to continue with recurring payments. This can help avoid chargebacks or refund requests. Think of the long-term impact when setting up promotions and choose wisely what you promise your customers.

Implement card fraud prevention tools

A comprehensive processor (like Forte) can offer several tools to help you reduce chargebacks. You can require a CVC or CVV2 code on the payment form you implement, for one. If accepting cards in person, always request an ID and signature. Additionally, chip cards must be inserted, or dipped.

Provide incredible customer service

Merchants that consistently outperform when it comes to service see it pay off. Not only do they retain customers and build loyalty, they also help reduce the number of chargebacks for their business. When customers find it easy to contact and work with employees, they are more likely to settle the situation without initiating a chargeback. Also, be sure to have a clear and solid refund policy that you can stick to. This can help eliminate issues that might eventually turn into chargebacks.

Keep a written record

One of the most important things that a merchant can do to protect themselves against chargebacks is to keep documentation of each and every card transaction. In fact, a merchant must keep documentation for a minimum of 180 days. Every chargeback has a retrieval period where the merchant can provide documentation of their side of the story. If you didn’t keep records, you’ll be out of luck. Using a cloud-based, real-time reporting tool (like the one that comes with every Forte account) is a great, hassle-free method of keeping organized.

Chargebacks are, unfortunately, part of the game for many merchants. Luckily, there are things that you can do to help protect your business against these costly losses. Use these six tips to build a solid defense against chargebacks and subscribe to the blog for more helpful articles.

If you aren’t already accepting credit cards, browse our newly redesigned pricing packages and see what fits. We are also standing by to help answer any questions you might have about chargebacks or other card acceptance topics. Give us a call at 866.290.5400 to speak to a payment specialist today.

Photo credit: Michal Jarmoluk

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