How to prevent chargebacks and protect your high risk merchant account…
With THIS Information…
You Can Avoid the Danger of Losing Your Merchant Account
Chargebacks and How They Affect You
As a business owner, you probably know that getting a credit card chargeback is a disputed transaction resulting in the reversal of a credit card payment directly from the customer’s bank or credit card.
The dispute service was developed to protect customers against fraudulent businesses, but only if the business is to blame.
A chargeback threatens your business when the customer files a dispute without requesting a refund from your business first. This can hurt your business in several ways:
- You can lose your merchant account if you go over the maximum 1-1.5% monthly chargeback ratio you are allowed to have.
- You will accumulate harmful losses, slashing your profit margins.
- You could lose your reputation among credit card processors, or be put on the TMF list.
To stay in the black, you need to learn how to prevent chargeback fraud and maintain the lowest possible chargeback ratio.
To control this threat, let’s do a simple review.
Chargebacks May Occur Because of Simple Business Mistakes
- Shipping issues. Your fulfillment company may drop the ball. Maybe you or they entered the wrong address on the shipping label. We always recommend you keep all shipping receipts, and for high ticket items, include a tracking number. These practices help you deal with delivery disputes.
- Defective or incorrect products. A customer might dispute a transaction if they don’t receive what they purchased or the item arrived defective. Applying an effective system of quality control and double-checking orders will help prevent this issue.
- Poor customer service. If a customer is unhappy with how they were treated or how the transaction was carried out, they may file a chargeback. Prevent this by making sure you deliver what you promise and that your customer service department knows what they are doing and treats your customers with respect.
Some Customers Abuse Chargebacks
- Choosing the easy way out. If a client wants a refund, they believe going through the bank seems easier. They don’t realize that it’s faster (and more considerate) to contact the merchant for a refund.
- Buyer’s remorse. Consumer buys something, consumer decides they don’t like the item. Then they want a refund without returning the merchandise or canceling the service. This means they are stealing from you.
- Shopper’s brain fog. The customer doesn’t remember making the purchase and tries to pin the mistake on you. Here is where saving communication and transaction records is essential for disputing a chargeback.
- Refund option confusion. Some customers get confused about refund options. Invalid chargebacks are just a result of this confusion. Make sure your refund policies are crystal clear on your website’s “Terms and Conditions” page and in the customer’s e-mail receipts to avoid this issue.
What Happens When a Credit Card Chargeback Is Initiated?
The whole process begins when the cardholder contacts their bank about the transaction. If they purchased several individual items from you, each individual transaction will show up as a separate chargeback accumulating several fees.
The issuer then views the request. If the issuer determines the claim is invalid, no problem. The chargeback will be declined. If they believe what their customer says, the issuer will then proceed with the process and send the paperwork to your processor who then forwards the paperwork to you.
At this point you can dispute the credit card chargeback (a right given to you by Visa and Mastercard). Just understand, that the process is involved and drawn out and most entrepreneurs aren’t experienced in fighting chargebacks.
At this point you, as the merchant, has to deal with the stress of waiting and the potential money loss. You’ll end up paying an expensive, non-refundable fee for each chargeback. If you receive too many chargebacks, you may lose the ability to process credit card payments. Too many of these penalties can lead to the demise of your business.
Other customers will suffer because the merchant is often forced to raise the prices, or in extreme cases, if they are hemorrhaging money due to poor business skills and too many chargebacks, they could close their doors.
How Long Does It Take to Dispute a Chargeback?
Visa only allows you to dispute your credit card chargeback within 30 days, but it’s actually your processor who decides how many days you have to dispute a chargeback, and that could be as little as 15 days.
For this reason, you should provide your evidence of the dispute quickly. Issuers require records of every transaction, conversation, and email involved with the customer.
Even after disputing a chargeback, it can still take anywhere from 45 days to 6 months for a disputed chargeback to be approved or denied by the card holder’s bank. Unfortunately, the card holder is allowed to dispute the charge a second time even if you won the first round.
Then there’s also pre-arbitration if you decide to have Visa mediate the chargeback.
For this reason, the waiting period can be a frustrating process.
Rapid Financial Solutions Makes It Easy to Beat the Threat of Chargebacks
This is why on top of providing high risk merchant accounts, we also provide you with options to prevent and fight chargebacks.
We aim to help our clients’ businesses thrive. By choosing us for chargeback prevention, you can expect:
- No contracts. You aren’t locked into a contract like other chargeback prevention services. You can cancel any time.
- No monthly rates. You won’t be charged any monthly minimum charges to keep the service intact.
- No hidden fees. You only pay when you get a chargeback or if we need to fight the dispute for you.
- We fight for you. We are professionals and have only been working with companies who have been fighting chargebacks for years.
- Automated convenience. The service is automated by a computer. Human error and the risk of fraud are greatly reduced.
- Credit Reassurance. If you still get hit with a chargeback and you’ve paid for our prevention service, you’ll be issued a credit that will show up on your invoice. Some other chargeback prevention services do not keep track of these errors and merchants pay double by getting charged twice.
Keep your merchant account safe and working to grow your business. We offer two winning solutions to solve this problem so you can take steps towards protecting your merchant account.
Schedule an informative consultation with one of our professionals, and discover how to prevent chargebacks.