By now you know that a business that accepts credit cards is a business that is likely to see better sales than a cash-only company. If your business accepts payments via credit card, you’ve likely dealt with the one trouble spot that comes with the territory: chargebacks.
What Is A Chargeback?
A chargeback is what happens when a cardholder disputes a charge on their credit card with the hope to receive a refund from the card insurer. When the card insurer believes the dispute to be justified, the merchant is then held responsible for the previously approved charge plus fees that come along with the dispute.
While there are several circumstances in which chargebacks are warranted, such as lost or defective merchandise, there are other circumstances in which the card holder simply wants to get their money back regardless of the manner in which they received the item.
The bad news is, too many chargebacks to your small business can cause a loss to revenue that’s more than substantial.
Steps To Avoiding Chargebacks
Thankfully, there are steps you can take to prevent potential chargebacks and keep your business going strong:
1. Be clear about your refund policy
Clearly state your return and exchange policies where the customer can see them, including on the back of your receipts.
2. Don’t keep going after a denial
If the authorization request is denied on a credit card transaction, don’t keep requesting approval multiple times. Ask for a different payment method.
3. Upgrade your payment equipment
Small businesses can reduce their chances of chargebacks with EMV-compliant solutions. If you have not become EMV-compliant and upgraded your equipment, do so as soon as possible.
4. Make an impression
All credit cards should be swiped or inserted into a reader—no exceptions. If by chance your system is not functioning and you need to manually key in a credit card, you should use a manual imprinter. This proves the card was physically there for the transaction.
5. Work with a partner
When you work with a reputable and experienced payment processor, you’ll have extra guidance that can help you avoid errors and resolve disputes. While you can’t avoid every scenario, you can certainly keep chargebacks from bringing your business to a halt by taking the steps toward better protection.