As society moves ever closer to the concept of cashless transactions, the use of credit and debit cards is more prevalent. For all the convenience they offer, few people realize that there is a huge data processing industry behind the use of these financial tools. Things like chargebacks are of little concern to the average consumer.
The business owner, however, understands just how important it is to work with the correct credit payment processing company. They understand the costs that can be incurred, especially if the chargebacks rate becomes a problem. With the millions of transactions that occur every day, the business has become highly competitive.
There are firms that serve very small markets and, of course, the behemoths that take care of the major retailers. In the middle, there are a number of companies that are committed to providing service to those small to mid-size companies that have a high volume of transactions but remain highly customer-oriented. Managing chargebacks in this environment is of critical importance to avoid excess costs. It is also a strong indicator of overall customer satisfaction.
The first thing to do in the credit card payment processor relationship is to select a provider that will work closely to educate and inform a business owner on the best practices for the effective use of their services. That includes knowing and avoiding the major reasons behind most chargebacks.
Understanding the causes behind most credit card chargebacks include the following
1. Discrepancies in the amount of a sales draft. To avoid chargebacks for this reason, never change the amounts on a sales draft. Obtain the authorization for the precise amount that is to be charged to the card.
2. Trying to split charges. If an initial authorization is declined for the full amount of a transaction, avoid trying to get an authorization for a lower amount. To avoid a problem, it is best to decline the purchase or ask for another form of payment.
3. Manual imprints. If an electronic swipe is not successful and a manual imprint is used,chargebacks are avoided by ensuring that the signature and all information about the transaction is clearly written on the imprinted, manual draft. This includes making sure all information about the merchant and location is included.
4. Handling refunds. Refunds are a frequent source of problems causing chargebacks. All refunds should be made to the original card and original number. Avoid providing a refund by check or cash. If multiple sales are involved in the refund process, handle each one individually and, again, refund only to the specific, original card.
5. Return policies. Your return policy is an important part of handling the chargeback process. All processers require that it be printed on the credit card sales draft and signed when the original sale is made. The refund policy and the area for signature must be close to each other to be honored as valid.
Avoiding chargebacks requires clear policies and continual training of all employees. Following the procedures is important, especially in companies that have a high level of credit and debit card transactions. The greater the volume of purchases that are processed, the more important it is for employees to be consistent in the process.
There is one additional security step that is often ignored and can avoid costly chargebacks. That step is comparing the customer’s signature to the signature on the credit card. If not signed, the customer should be required to sign the back before accepting the transaction.
Using the right payment processor and procedures helps avoid costly and frustrating chargebacks for the average business owner.