Chargeback, it’s not a matter of if but when you’ll get them. A big misunderstanding that merchants make is that they won’t have them. That is a pretty big lie to tell yourself. Whether you’re a Card Present vendor, operating a sporting goods store or a strictly E-commerce business, you’ll have chargebacks on your settlement statement. Today, with as much fraud in the marketplace as there is, business owners need to watch their statements closely and be diligent to avoid chargebacks whenever possible.

Chargebacks stem from a number of sources. Probably the most common type of chargeback is a customer dispute. It happens; customers aren’t satisfied with a product or service and wish to get their money back. Most often, they’ll contact the merchant for a refund or some sort of compensation; the concept that the customer is always right, causes more problems than ever these days. If the merchant feels that they have fulfilled their responsibilities and cannot come to terms with the consumer, then usually, the consumer goes directly to their issuing bank that the charge was made on to dispute a charge. This is often done while the customer still has the merchandise or has been rendered the services. From there, the bank will contact the merchant to basically get their side of the story. If you, the merchant has taken notes, has good records of their transactions and has dealt or spoken to the disputing customer directly, this can be a saving grace for you and save a chargeback. A lot of times, in big organizations, this is not the case, and banks tend to charge back merchants more easily as there’s a long and inconsistent trail knowledge of the original transaction. If you have a customer service department, in-house customer dispute resolution and good call logs will help if chargebacks occur. The underlying moral her is, “Resolve your customer’s issues while you can.” You’ll save a chargeback and may save future business.

Another cause of chargebacks are Procesing Errors. These are usually the merchants fault; double processing single transactions or entire batches through the same or different banks happen more than you think. Be thorough, this is your business. Processors make mistakes too, make it a point once a month to reconcile your Settlement Statements and always take every chargeback seriously, every chargeback does count. Many times, merchants won’t be contacted about their chargebacks, as they stem from the issuing bank to the merchant bank; usually the type of chargeback delegates the merchant participation. Typically, your merchant bank will contact you about a customer dispute. Also, stay on top of pending chargebacks (investigations) or customer disputes, there is a time limit; if not responded to in a certain timeframe by you or the merchant bank, issuing banks will issue the chargeback and their decision is final.

Fraudulent charges are commonplace today; they’re a huge pitfall and merchants need to always be vigilant. Identity theft is not going to decrease and the criminals that perpetrate these types of crimes are getting smarter. These types of chargebacks usually stem from Card Not Present Transactions where a charge is called in or made via the internet. To help prevent fraudulent activity, requesting additional card or cardholder information prior to card authorization can weed out the bad cards. Card control numbers or CVV2 on the front or back of the card (front for AMEX, back for MC and VISA) mean that the cardholder is in possession of and looking at the card at the time of purchase. Billing information requests and requiring that merchandise is shipped to the billing address are a help too.

While most businesses have direct capture, in that the charge is made at the point of sale; some businesses preauthorize transactions and utilize third-party fraud scrubbing agencies to settle their accounts before the funds are captured. This is sometimes done out of sheer diligence and other times is a necessity for the merchant to process credit cards. Either way, third-party fraud scrubbing and other services like 3 D secure processing and AVS and CVV2 are offered by merchant service providers. You are not going to eliminate chargebacks or fraud, but diligence, good transaction protocol and accurate record keeping can lessen the time you spend fixing problems that you could have easily avoided.

For more information on echeck processing, high risk merchant accounts and online credit card processing. please visit www.stradafee.com!