Copyright (c) 2009 Melanie James
If you are a business that accepts payments through credit cards, then one of the major issues you should be concerned about is the risk of having charge backs. This article will help you understand what chargebacks are and ways you can avoid them as a business owner.
What is a chargeback? When a customer places an order and pays with a credit card, they may change their mind and request a refund from their card issuer. Consequently, the merchant ends up losing the sale that is supposedly completed. There are several reasons that causes chargebacks. If a customer isn't satisfied with the order or if the shipment has damages, the customer may call off the purchase and demand a refund. Another reason is stolen identity. A thief may have stolen the real cardholder's information and used it to place the order. When the real cardholder receives his/her billing statement, he or she may call the credit card company to dispute the charges as unauthorized or fraudulent. In response to the dispute and after an investigation has been conducted, the card issuer may reverse the disputed transaction.
How to Avoid Charge Backs
Clearly, credit card charge backs can affect your business particularly if you're dealing with a large order or if chargebacks frequently happen. What was initially a profit made turns out to be a loss. This is why, business owners need to make sure that orders will be delivered with utmost care and reach their customers in the best condition. Furthermore, online merchants should keep an eye out for fraud. When accepting credit card payments, it is crucial to ensure that you are dealing with the real cardholder and that the purchase is made in good faith. Here are essential tips on how to avoid credit card fraud and chargebacks:
- Swipe the card or imprint it on the transaction receipt. If a customer purchases from your shop, don't forget to swipe the card. Thus, in case of a dispute you can prove that the customer used the actual credit card to make the purchase.
- Closely examine the cardholder's signature. Don't skip on this crucial step. Spending a few seconds to check the authenticity of the cardholder's signature can save you from possible fraud. Don't just presume that the customer is the owner of the credit card as the card may very well be stolen.
- Ask for proof of identification. Require your customer to present a valid ID (for reference) especially for large purchases.
- Check the credit cards expiration date. Make sure that the credit card is not expired. Credit card thieves sometimes use old or expired credit cards to make small purchases and get away with it.
- Call the credit card issuer. If you have, for some reasons, doubt the authenticity of the credit card or the identity of the holder, take a moment to call the credit card issuer for confirmation of details. If you're going to make the call, make sure that you have the credit card on hand. Make the call in front of the customer to ensure that you are only making a confirmation would also be wise. (Consumers are advised not to let their credit card out of sight due to phishing & extra swipe scams.
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