Merchant services

3 Ways To Protect Yourself Against Credit Card Chargebacks

credit card chargebackA credit card chargeback typically results when a consumer refutes a charge and is found to be in the right by both the issuing and acquiring bank. A consumer who has purchased goods, or services using their credit card can, if the merchant fails to comply with secure card processing practices, and EMV certifications, issue a chargeback using their credit card company. The funds are returned to the customer and a chargeback fee is usually assessed to you ranging anywhere between $25.00-$75.00. 

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Credit card chargebacks are not just costly in terms of the loss of sale and subsequent penalty charge. There can be many bad results and complications from having too many credit card chargebacks. Most merchants have a threshold when it comes to how many chargebacks their business is allowed to have per month. If a business reaches their threshold for chargebacks, or have continued to increase in the amount of monthly or annual credit card chargebacks, their merchant account can be shit down for an indeterminate amount of time, or shutdown for good. If your merchant account has been terminated, you will have a very difficult time trying to get a merchant account in the future. And realistically, you may not be able too.

In order to protect your business against credit card chargebacks, follow these 3 key tips and keep your hard earned money in your pocket.

EMV Certified - PCI Compliant

Having up to date EMV certified, PCI compliant payment processing equipment will help you reduce your annual chargebacks drastically. When a consumer comes in to pay with their credit card, and you pass them your credit card machine that prompts them to insert their card and their pin, they will not be able to dispute that transaction with their credit card provider.

This is because; they have not only presented the card to you, but also used their chip card, and manually typed in their pin. It would be very difficult to prove that it was not the cardholder who did that transaction, as the pin and chip security feature protects you against those chargebacks. Also, making a habit of not accepting over the phone transaction unless the person is able to provide some qualified information over the phone, or has been in the store previously and you can pull up their account on your computer.

Card not present, meaning the card was not there when the purchase was manually entered into the credit card machine, typically side with the customer, as they can easily say that they did not make that call, or their card had been stolen etc. 

Clarity and pricing

Your business is your responsibility, and with that responsibility comes the need to have clearly listen pricing for all products and services. One of the typical causes for chargebacks are the difference between the price that may have been listed on the website or throughout the store, and what shows up on the consumers credit card statement. With an online store, this is especially important as the check out process for every website is different.

Sometimes the site may not list the entire price or additional costs or fees are added to the final price prior to check out, either way, be aware that if a difference in the listed price or purchased price is somehow different than what is reflected on their credit card statement, it will be very difficult for you to refute the chargeback, and you will most likely be on the hook for the entirety of the chargeback.

Contact information

Believe it or not, having something so simple as clear and accessible contact information, phone numbers, mailing address, email addresses etc. can be the difference between one or two chargebacks and much more. The reason is because if a consumer has a way on contacting your business, whether it is through a helpdesk number, customer support email address or simply just a live chat on the website, they will more than likely contact you prior to contacting their credit card company.

By providing a simple, clear way to get in touch with your business, will provide your customers with the comfort that something can be done to change their problem. It may be refunding them with a credit for an additional product, or changing their total price rather than just having that customer to directly to their credit card company. This type of service will also build trust with your customer base, and that customer will 9 times out of 10 return to purchase something from you in the future.

Take the time to go through these three important points regarding chargebacks. They will greatly help you reduce costly annual chargebacks, and give you the piece of mind that you are processing vital credit card information the correct way. It is also very important to contract with a professional, credible payment processing provider.

Do your research, and ask the right questions when choosing a payment processing provider, and they will be able to help you ensure that your transaction practices are within the code of conduct guidelines, and all equipment is PCI compliant and EMV certified. Chargebacks are not fun for the consumer or merchant alike.  They are time consuming and can be quite costly for the merchant, start taking the right steps to protect yourself and your business about credit card chargebacks.


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Matt Moore

As the President and Co-Founder of BNA Smart Payment Systems, Matt is responsible for the company’s strategic direction, daily operations, and growth. Entrepreneurial by nature, he brings a wealth of sales and marketing experience earned from over 36 years in business. He has developed, implemented, and directed international sales and marketing strategies, established strategic alliances with international companies, and demonstrated leadership in the electronic payments market. Prior to BNA, Matthew served at the senior levels of major EFT/POS companies, helping them increase sales and optimize customer service. Matt is also a father of three, a fitness enthusiast who does power lifting and CrossFit, and he enjoys weekends at the cottage.

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