Businesses today are more and more frequently accepting credit and debit card payments, and the main reason is simple – they don’t have another option. The bottom line is that if you don’t give customers the ability to buy with their cards, you’re essentially eliminating a large portion of your sales. More people than ever before are using credit and debit cards to make purchases, and cash is becoming less popular.
But while accepting card purchases means that you increase sales potential, it can also come with some risks. In particular, you face the risk of encountering chargebacks. This is one of the most frustrating things that businesses can deal with, and it’s worth understanding them and learning how to reduce them.
What Is A Chargeback?
Essentially, a chargeback is nothing more than a reversal of a transaction. It’s usually done to protect consumers from fraudulent activity – activity that could be committed by merchants as well as individuals. For instance, if a person has their credit card stolen, and the thief uses that card to make a purchase, that purchase could then be reversed. The issuing bank and the card networks will each have a role to play including issuing the chargeback, denying transactions, and handling the settlement process.
What If You Get A Chargeback?
If you’re a business that is presented with a chargeback, your only real option is to begin gathering evidence. This can help show that the purchase was legitimate and that you deserve the money. In the case of fraud, some credit card companies or banks may end up settling, giving you the money and then seeking restitution from the criminal in the courts.
Chargebacks can quickly cut into your profits, and along with having a direct impact on your bottom line, they may also lead to long periods of stress as you try to correct the issue. However, chargebacks also have a benefit for consumers and merchants – they help merchants stay honest and transparent, delivering exactly what they say they will.
So what can you do to reduce chargebacks? A few tips can help:
• Always deliver the products or services that you promise. This way you don’t end up with contested transactions
• Follow all applicable security measures when accepting payments. Verify customer identity whenever possible.
• Use a card service company that offers security and customer service to help keep you and consumers safe
The bottom line is simple – chargebacks will happen. But if you partner with a good merchant services provider and use common sense, you can reduce the number of them that your business has to face each year.