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The Dummies’ Guide To Avoiding Chargebacks

  • August 3, 2021

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Chargebacks are a real pain in the backside. They occur when a customer successfully disputes a transaction with your business and gets their credit card provider or payment service to refund the money.

Chargebacks can happen for all kinds of reasons. In many cases, they occur because the cardholder didn’t actually make the transaction - somebody else did fraudulently. It can also happen if you provide customers with misinformation or do something they deem fraudulent. Other reasons include things like accepting an invalid card, not successfully transmitting data to a payment processing company, processing the same transaction multiple times, and problems involving vouchers. 

Too many chargebacks can put you on the MATCH list. This is a list of accounts held by your bank that it considers high-risk. Eventually, a high level of chargebacks can cause financial institutions to deny you your merchant account altogether. So what can you do to prevent chargebacks and get off MATCH list databases? 

Educate Your Staff 

The first step is to educate your staff on the tactics that criminals use to commit credit card fraud. Ideally, you should have at least one person in your organization who can review the day’s payments and tell you whether you have an issue. You also want to educate customers on how to use their payment tools correctly. Something as simple as a reminder on your website telling them to be careful in how they pay can actually help to reduce fraud

Resubmitting Transactions

Resubmitting transactions is one of the most common causes of chargebacks. If a bank believes that you have submitted the same transaction twice, they will automatically deny the second payment. 

If you’re worried about a payment submission, read up on the terms and conditions surrounding resubmission, Ensure that you are following the correct rules to avoid any unnecessary customer account refunds. 

Add Extra Online Protection

Both MasterCard and Visa offer secure payment options designed to enhance security and keep customers safe. Make sure that you are using these services on your sites for high-value transactions, even if they slow your services down. 

Refund Back To The Original Card

If you offer refunds, make sure that you make them to the original card that the customer used to make the purchase. Don’t accept any refund that goes to different accounts. If you do, you could be helping a criminal commit fraud

Confirm Delivery

Payment processing companies will often issue chargebacks if there is no evidence that the goods and services that a customer ordered actually arrived at their address. That’s one of the reasons why it is so critical to always record your deliveries. Make sure that you are delivering to the right person and get written confirmation and a record. 

Don’t Use Manual Card Details Key Entry

Always use your POS systems to read card details, like the number and expiry date. Don’t manually record the number as this makes it much easier for the cardholder to commit fraud by changing the numbers to somebody else. Customers may attempt to trigger a fraudulent transaction.