If you own a business, the ability to accept credit card payments is a big deal. Fortunately, there are a variety of credit card processing companies that can pave your way to success. Before you start accepting payments on a frequent basis though, it’s crucial to understand chargebacks, also known as customer disputes. Keep reading to get a rundown on the basics and be introduced to a new website that could make things even easier.
Chargebacks Protect Customers
Although you may not think you’re completely certain about what a chargeback is, there’s a good chance that you’ve made one at some point in your life, even without knowing the formal definition. Specifically, if you’ve ever spotted an unfamiliar charge on your bank statement and asked your credit card provider to investigate it, you’ve participated in the first step of the chargeback process.
How does this affect you as a merchant? Put simply, if the resultant investigation determines that a charge from your company on a cardholder’s account was fraudulent, the bank will refund the customer’s money. However, you have a burden to prove that the transaction was indeed legitimate.
If you’re unable to do that, the transaction’s value will be removed from your account, and you’ll have to pay a chargeback fee to the bank. In some cases, the amount can be as high as the hundred dollars per instance. Although the chargeback process is meant to protect consumers, it’s essential for you to understand the merchant side of things and understand your role in the event of a dispute.
Customers can also get protection from specialized organizations. One them is called the Consumer Financial Protection Bureau, and according to an article by the Huffington Post, the group has been able to resolve 90% of finance-related complaints from customers since it began operating in July of 2011.
What Can You Do?
Fortunately, even though consumers certainly have recourse when it comes to charges that may or may not be valid, there are things you can do to minimize the occurrence of chargebacks for your company.
Sometimes, customers may think that a legitimate charge is fraudulent if they don’t recognize the merchant name. Make sure that you’re aware of how your company’s title comes across on a billing statement. If it’s not intuitive, consider adding text to your website or invoice that begins by stating “Charges will appear on your billing statement as…”
Also, customers may request a chargeback related to merchandise that supposedly arrived in a broken condition. Protect yourself by purchasing shipping insurance, especially if you’re sending items that are particularly fragile. Cases where a customer claims that a product was never delivered are also easily resolved if you use a carrier that provides shipping insurance.
A New Website to Streamline the Process
Although it’s still in the beta phase for business users, a website called Chargeback.cc aims to make the dispute process more efficient for both merchants and their customers by eliminating the need to involve a customer’s bank or credit card company. According to the company’s website, companies can register for free and get a standard resolution process at no charge. However, premium services will come with a fee.
No matter what type of items you sell or the size of your profits, chargeback disputes are likely to affect your business at some point or another. However by becoming informed about your responsibilities, and also taking action to clarify things for consumers, you’ll be better able to cope with these issues when they arise.
Author Tony Alvarez writes for Merchant Maverick, where you can find credit card processors, comparison charts, as well as processor reviews for companies such as Moneris Solutions.