Chargebacks can be a major hassle for business owners, and they can really hurt your bottom line. When a customer disputes a charge with their bank and the money is returned to that customer, they get to keep the merchandise and you get to pay a chargeback fee to the bank – ugh! Luckily for you, we’ve compiled our top 13 tips to preventing chargebacks to minimize the time and money you spend dealing with them.
1. Don’t go ahead with a transaction if the authorization request is declined.
Don’t request authorization multiple times for the same transaction. Ask the customer for a different payment method.
2. If your terminal displays “Call” when you ask for authorization, call the credit card company immediately.
The representative will ask you questions about your business and the transaction, and may ask to speak to the customer. If they give you an authorization code, record it on the sales receipt. If no authorization code is provided, ask the customer to give you a different card.
3. If your system is not functioning properly and you must manually key in a standard embossed credit card, make an impression of the card for recordkeeping purposes.
Always swipe or insert every card through/into the reader, without exception. If the card is worn out or your terminal is malfunctioning, you may manually enter the card’s information into your system. However, you must also use a manual imprinter to record the card’s information directly onto the sales receipt. This is because a customer’s signature is not enough to protect you from chargebacks. You must also have proof that the card was physically present when the transaction was made.
4. If a customer wishes to pay with a gift card (which are unembossed), swipe or insert the card for all transactions, no exceptions.
Since there is no way to take a manual imprint of an unembossed card, you will need to ask the customer for a different payment method if the card cannot be read. Failing to do so makes you vulnerable to chargebacks.
5. Make sure the cardholder signs the receipt or the signature pad.
This is absolutely required for all card present transactions, regardless of the type of card used.
6. Run the card only once.
Swiping a card over and over can lead to duplicate transactions and create a major chargeback headache. If you made a mistake and need to void a transaction, write “VOID” in large letters on the customer’s receipt and let the cardholder watch you tear it up.
7. Keep your records straight.
Make sure you don’t deposit two copies of the same sales receipt or record the same transaction more than once. This will lead to duplicate transaction chargebacks.
8. Clearly post your refund and return policies and make sure they are clearly communicated to the customer.
The best practice is to print your refund and return policy directly on the receipt. If this is not possible, manually write or stamp it near where the customer signs. The policy must be clearly visible on all copies of the receipt to fully protect yourself from chargebacks.
9. Deposit receipts as quickly as possible and do not keep them for more than a few days.
Failure to do so may result in a chargeback.
10. Honor all customer requests to cancel recurring billing promptly.
You may also wish to provide the customer with a written statement that their service has been cancelled and the date on which this took effect. Delaying puts you at risk for chargebacks.
11. If there will be an unexpected delay between when the customer pays and when they will receive their merchandise or service, let the customer know in writing and make sure to include the new expected date.
12. If an item is out of stock or otherwise unavailable, let the customer know immediately and give them the option to cancel the purchase or substitute another item.
It’s important not to substitute another item without the customer’s permission. Communicating clearly to the customer about the issue allows them to make informed decisions and reduces your chargeback risk.
13. Ship merchandise before you deposit the customer’s money.
Streamline your shipping processes so you can get inventory out to customers quickly and avoid depositing the transaction before shipping. Customers may become upset if they see a charge for items they have not received.
When chargebacks strike, you need a partner you can trust. That’s where 360 Payments comes in. We’re standing by to help you navigate the complicated world of chargebacks, no matter what. Give us a call at 1-855-360-0360 or drop us a line on our website. We’re standing by to answer any question you may have.
PPS – Looking for a new credit card processor? Read this first.