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As a business owner, you know that accepting a customer’s credit or debit card when they are purchasing their products or services is a payment option that you have to offer.  As a merchant, you are probably aware of what an inconvenience chargebacks can be.  In most cases, chargebacks are an issue between the bank or credit card company and the cardholder (customer).  However, the merchant is caught in the middle and has to incur the fees when the charge is reversed by the customer.

One of the dangers of having too many chargebacks is that your merchant account could be terminated if they exceed 1% of your sales in a 1-month period.  Avoiding chargebacks is not that difficult even if you operate an online business.  Chargebacks typically increase and occur with greater frequency during the holiday season when retail sales peak.  Here are some tips for avoiding chargebacks in three critical areas – at the point of sale, fulfillment when a credit or debit card is not present, and during processing.

Examining graphs with other people on backgroundAt The Point Of Sale (POS)

Make sure that you get an authorization for every credit or debit card transaction.  If you receive a “Call” message, contact your authorization center immediately.  Never complete any transaction that the authorization center has denied.  Be sure that you only enter the transaction once in the POS terminal and deposit it only once as well.  Inform the customer of you refund and return policy (or cancellation of service policy).  Any incorrect receipts must be voided.  Last but not least, get the cardholder to sign the receipt.

Fulfillment When A Credit Or Debit Card Is Not Present

Keep the customer informed about their transaction especially if there is going to be a delay in the shipment of their products or services.  Notify them in writing.  You should also notify the customer of any shipping delays when an item is out of stock.  Let the customer know that you may have a similar item in stock that they can substitute or if they choose to do so, let the customer cancel the transaction.

During Processing

Ideally, all credit and sales receipts should be deposited as soon as possible but depositing them the same day of the transaction is the recommended course of action.  If the customer has set up a recurring payment schedule (monthly, quarterly, or annually) and decides to cancel the purchase, honor their request immediately.  Then be sure that you follow through on their request.

Posted in credit card processing on Feb 26, 2014