It’s important for merchants who need a high risk credit card processing account to be educated on the best practices in keeping their businesses secure. One question we often receive at Payline is about chargebacks – what are they, and what can I do to avoid them? We take a stab at the answers below.
A chargeback occurs when a customer receives their credit card statement and does not agree with the charges applied. The customer has two options when they notice a discrepancy on their statement:
1) they can call the merchant to request a return on their merchandise; or
2) they can call the number of the issuing bank located on the back of their card and issue what is referred to as a “chargeback” against the transaction.
It is in the best interest of a merchant to do as much as possible to resolve any customer issues before the customer initiates a chargeback. But, unfortunately, bad things do happen to good people: oftentimes these charges are simple mistakes, and the customer does not usually realize they could be costing you money.
In the worst case, excessive chargebacks can cause termination or “freezing” of a merchant account. Some industries (especially those that require high risk credit card processing) cannot avoid chargebacks.
The first step to avoiding chargebacks is to use a dedicated business checking account. If you have a website, be sure your “doing business as” (DBA) name is the same on your website as it is for your merchant account. This will look more familiar to a customer when they see the transaction on their statement. If you set it up correctly, your business telephone number can be placed on the statement next to the corresponding charge, so the customer will be more likely to call you instead of the bank and simply return the goods – saving you from the headache of a nasty chargeback.
Secure your payments from the threat of chargebacks with tools like Verifi and Ethoca from Payline. Your merchant account matters as much to us as it does to you.