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Guarding Your Business From the Risk Of Chargebacks

As a small business owner, you know the importance of accepting credit cards. But accepting credit cards for small businesses can cause headaches, and one of the biggest sources of headaches can be chargebacks.

Chargeback Fees

A chargeback is when a customer disputes a credit card charge, and the bank or entity that issued the card reverses the charge. Typically, the customer asks for their bank to return the funds for that charge to their account. This is different than a return, which occurs when a customer returns an item, and you credit their card or account for the purchase yourself. Credit card chargebacks can take place for a variety of reasons. They can take place if a person’s credit card has been stolen and charges on their card don’t match their actual expenses. A chargeback can take place because of friendly fraud, as well. In these situations, a customer may not remember making a purchase, may not know how to return what they bought, or may not recognize your business name on their bank statement. Sometimes this happens because the merchant made a mistake on their end, while other times it occurs because of a customer’s mistake. Whatever the reason for them, chargeback fees can be a difficult issue for businesses. However, there are some ways to combat them.

Identity Check

One of the first and most important ways to reduce the chances of a chargeback is to verify your customers’ identity. Ask for an ID for in-person transactions, as well as verification codes, if applicable. For swipe transactions, require a customer’s signature. You can even take the added step of sending email receipts to your customers if it makes sense for your business.

Use Your Store Name

Another way to prevent chargeback fees is by using your business or store name on transactions. This is important, because if you are using a name your customers don’t recognize on your customer’s billing statement, they may suspect fraud and dispute a transaction. Make your information clear and recognizable. Doing so will go a long way to prevent chargeback fees.

Make Your Shipping And Return Policies Clear

A final way to prevent chargeback fees is by making your shipping and return policies clear. Let your customers know how long items may take to ship, or how long they have to return items so that they don’t end up disputing transactions out of frustration because they didn’t receive something or weren’t able to return something they no longer want.

Protect Yourself

To a degree, chargebacks come with the territory of accepting credit cards for small businesses. But that doesn’t mean you can’t be protected. Take steps to protect yourself. Consider our suggestions for reducing the risk of chargeback fees. They can save you time, money, and headaches. And remember, if you want to simplify payment processing, consider Moolah for your needs.