Chargebacks are the Grinch of the processing industry. However, unlike the holiday cartoon, chargebacks never turn into a nice creature. They wreak havoc on businesses big and small, old and new, profitable and struggling. Most existing merchants have experienced a chargeback, or at least the threat of a chargeback, at some time. While chargebacks are not 100% avoidable (unless you operate a “Cash Only” business”), there are things that you can do to limit their damage.
First off, if you are an online merchant, make sure that the shipping and billing addresses match – or are at least similar. If the shipping address is in Latvia and the billing address in Louisiana, this should raise a flag. You should also always ask for a phone number; in fact, make it mandatory that a buyer give a phone number and email address. If neither respond to a request for additional information, you can hold the shipment. However, fraudsters will typically not do business with businesses that ask for this information.
Every processor has its own protocol for dealing with chargebacks. Be sure to follow that protocol. It is also wise to be familiar with that protocol before a chargeback occurs. When signing up with a merchant account provider, ask about their chargeback process. A reputable and experienced provider will be upfront with you with their chargeback process. Another tip is to look for a processor that is also a chargeback protection provider. Chargeback prevention can help you better understand the chargeback process because you are directly involved in every step. The process can be lengthy, but it is important that merchants are kept abreast of the situation. Chargeback Protection can also help you learn if the charge is legitimate or not. Without this option, you are not alerted to any option, other than to accept or deny the charge. You go into the process blind, which is bad for yourself and the entire processing industry.
A chargeback can ruin a business, but there are ways to help combat the situation. Be sure to monitor your sales, and invest in chargeback protection. The time it take to apply will be well worth it once a chargeback hits.