13 Tips To Guard Your High Risk Merchant Business Against Chargeback

For many small businesses that accept credit cards, chargeback is way costlier but there are ways where you can protect your business against those unfair chargebacks. Before going further, let us understand what is a ‘Chargeback’?

Chargeback 

A chargeback happens when a customer after purchasing a product, contact to his/her card issuer to dispute the charges. In simple words, when a customer purchases a product and due to some reason disputes a charge with his/her bank, the money is returned to that customer as well as he/she gets to keep the product. But the bank charges the business owner, from whom the product was purchased. This payment, which the business owner gets to pay to the bank, is called the chargeback.

Here are few tips that can help you prevent chargeback and minimize the time and money spent while dealing with it. Being business owner you should understand that disputes could be considered valid due to many reasons. Customer may dispute charges if:

• A hacker using the customer’s identity made the purchase illegally.
• The wrong item was received.
• The product was adulterated
• The customer does not recognize the charge on his credit card statement.
• The customer was billed incorrectly.
• Let us now discuss few tips which can help you in preventing a chargeback.

Declined authorization: If the authorization request is declined once, do not go ahead with that particular transaction instead ask customers to opt for different payment method. Also, keep in mind not to request multiple authorizations for a particular transaction.

Authorization code: There will be cases when word “Call” is displayed on your terminal while authorization is being checked. At this point call the credit card company right away. The representative will ask you a few questions and may speak to its customer as well. After that he/she may or may not provide you with an authorization code. If the authorization code is provided, record it else request the customer to try a different card.

The system not working: There can be cases where the system is not functioning properly or the card is worn out. At this point, you should key-enter the credit card number, and also remember to make an impression of the card for keeping the record. This is important because a customer’s signature is not enough to protect you from a chargeback.

Gift card: Gift cards are unembossed cards and there is no way to take a manual imprint of it. In case customer wishes to pay by gift card it is advisable to ask the customer for a different payment method.

Signature: Regardless of the type of the card used for the payment processing, the signature of the cardholder on the receipt is mandatory. This can be used as a proof that the customer made the purchase himself.

Swipe only once: You should swipe the card only once to avoid duplicate transactions, which can lead to a major chargeback. If such situation arises, write “VOID” in bold letters on the customer’s receipt and tear it in front of the cardholder.

Record keeping: To avoid duplicate transaction chargeback, make sure that you deposit only one copy of sales receipt. Be cautious about recording sales; do not record the same transaction more than once.

Clear communication: Clearer is the refund and return policy, better will be the communication and it will protect you from chargeback as well. As far as refund policy is concerned, it is better to print it on the receipt directly. If not possible, stamp it near customer’s signature.

Receipt deposit: To avoid chargeback, deposit receipts as soon as possible. Make it a point that all the receipts are deposited within a day or two.

Cancellation request: It is a good practice to honor all customer requests to cancel recurring billing and provide them with a written statement for the same with a date on it. Delay on it can put you at risk for a chargeback.

Unexpected Delay: If, due to any reason, there is a gap between the time payment was made and the time when the product was delivered, it is advisable to inform the customer about the same in written and if possible, also let the customer know the new expected date.

Out of stock: If in case, the product is out of stock or unavailable due to any reason, it is important to intimate the customer about the same and asks them whether they would like to cancel the order or would like to purchase another item instead. Keep in mind that without customer’s permission do not send any substitute product. This will help in reducing chargeback risk.

Shipment: Never deposit the money you have charged from a customer before product being shipped to the customer. Streamline shipping process in order to get the product out to the customer as quickly as possible. There are chances of a customer getting upset about paying before receiving the product.

3 Questions to Ask Your New Credit Card Processor And Payment Gateway

If you are running a business that deals with sales and purchases, there might arise situations where you need to choose a new credit card processor, but it is not as easy as it seems. It is a big decision and before making a final call you should be aware of certain things, like Fee charged and contract, customer service department and cost-effective tool. Do the comparison, study the market and then make the final decision. Let us now discuss the 3 questions you should ask your new credit card processor before finalizing it:

Structure of Fee Charged

When you opt for such tools, you are charged with a certain amount of fee, but it is important to know what exactly those fees are, more commonly called breakage of the fee. The fact is that most of the high-risk merchants have no idea about the process and end up paying a high amount of fee without actually knowing the hidden high markups in their pricing structure. To process the transaction, an interchange part of pricing structure is paid to the card issuer. Apart from this,there is an extra fee that they put on the top of it to gain more profit. So, when you are applying for new credit card processor/merchant payment processor, request them to separate out the interchange fee so that you can have a clear idea about how much money they are making or charging you in total.

Contract and Time Duration

Whenever a merchant wants to opt for a new credit card processor, he/she needs to sign a contract, which will lock you with them for certain period of time. It is important for high-risk merchants to check for options when shopping around for new processor and also to finalize the processor with shorter time duration instead of multi-year contracts. The advantage of choosing a short-term contract is:

• They will work hard for your business to impress you so that you renew the contract instead of shopping for new credit card processor or merchant payment processor once the contract expires. If you end up signing a multi-year contract, you will soon be forgotten and ignored and service quality provided may deteriorate.
• If any serious problem arises and you have a short-term contract or non-existing contract, immediate help will be provided to resolve the issue so as to retain you as a customer, whereas, if you have a long-term contract, it might take some time to resolve the issue you are facing.
• If you are not happy with the services provided to you by your current credit card processor, you can try out the new processor, which can meet your needs, but if you have a long-term contract, you have no option than sticking with the same provider until and unless your contract expires.

Customer Service Department

Efficient and knowledgeable customer service department is like icing on the cake. Get the opinion of the current customers of the credit card processor and find out about their experiences with the customer service department.Look for the processor whose,

• Support representatives are knowledgeable and can tackle any kind of issue if arises.
• Call waiting time is minimum.
• Support representative should be able to resolve issues in the first call and in shortest time duration.

If you are lucky enough and end up buying a credit card processor or merchant payment processor for your high-risk business that fulfills all your needs and the fee charged is worth every single penny you pay, hold on tight to it and never let it go. If you are happy with the services provided and the fee charged, it would be a good decision to renew the contract with the same provider than starting the process all over again.