5 Ways Small Business Owners Can Fight Chargebacks

Sep 25, 2017

Since banks have automated the chargeback dispute process, consumers will now find it very easy to file credit card charges. Currently, customers can file disputes by only a few clicks through the mobile banking apps in their Smartphones. And while consumers are happy about it, what does this mean for small business owners?

A chargeback could cost a retailer about $20 to $50 minus the lost sale. Statistics from Aite Group show that banks in the U.S. will process a whopping $5.6B in chargebacks this year, a 17% increase from 2015’s figures.

However, if you have to prevent chargebacks, you must understand why they occur. Here are the most common causes of chargebacks as listed by Chargebacks911, a top risk management company:

  • Fraudulent transactions
  • Duplicate processing
  • Transactions not recognized by cardholder
  • Goods not received or Services not rendered
  • Credit not processed
  • Transaction charges differ from the amount agreed upon

Shelter your business from chargebacks using the following tips:

  1. Make the most of the latest tech:

Most credit card processors are currently investing in tech that are quicker and better at spotting fraudulent transactions or preventing unnecessary chargebacks before they are fully  processed. For instance, services like Verifi enable you to contact the issuing bank way before the acquiring bank receives the request for a chargeback. This way, you can potentially deal with conflicts before they cost you.

  1. Use a chip card reader: 

Make sure you use the most recent hardware in the market to process your card payments. It should be remembered that two years ago, a new liability law that shifts fraud accountability to the “least EMV-ready party” was implemented. Therefore, if you’re the merchant stuck in the old ways of magnetic strip readers that can’t accept chips; it’s time you contact you processor to see if they have better alternatives.

  1. Confirm that the buyer is the actual cardholder: 

A good number of merchants ignore the simple validation process that can aid in identifying and stopping fraudulent credit card transactions. Always verify that the signature on the receipt matches the one on the customer’s card. Also, you can ask for an ID to confirm if the names on it match those on the card. As simple as these steps may look, you’ll thank yourself later when you realize how much you’ve saved in chargebacks.

  1. Keep clear records of everything. 

Regardless of how vigilant you are, you can never avoid all chargebacks. On the other hand, you stand better chances of having them reversed if you keep detailed records of all your transactions. Proper documentation will help you out when responding to an invalid case.

  1. Train all staff that deal with payments: 

All the above steps won’t matter unless your staff are educated and forewarned of potential dangers. That means if you have to successfully fight chargebacks then you must pass along these lessons to all staff that handle payments.

Wrapping Up

Chargebacks can bring down your business especially if you are the merchant who receive payments mainly through credit cards. However, with the above measures, you can fight chargebacks and smoothly solve cases that may harm your credit before things go out of hand.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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