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How To Avoid Chargebacks

For those who might not know what a Chargeback is, here is the basic definition:

A Chargeback is the reversal of a prior outbound transfer of funds from a consumer's bank account or credit card. This reversal is done after an investigation by the issuing bank has taken place, and the issuing bank deems the retailer in question to be negligent for not having supplied the goods or services paid for in a timely manner.

Here are some helpful tips that your business can use to avoid chargebacks:

Be Clear About Your Return, Refund and Cancellation Policies

State your policies clearly at the time of transaction.
 Your policy should be pre-printed on your sales receipts; if not, make sure to add the policy information on the sales receipt near the customer signature line before the customer signs. Be sure that the policy is legible on all copies of the sales receipt. Failure to disclose such policies at the time of transaction could be disadvantageous should the customer try to return their purchase.

For e-Commerce businesses, make sure your policies are clearly listed and visible on your website, most importantly make sure they are listed on your check-out page.

Make Sure To Settle Your Credit Card Transactions Each Day

Make sure that your POS equipment or software is batched out and settled each and every day. Do not let open batches sit unsettled for more than 24 hours. Failure to settle your daily transactions in a timely manner can result in “late presentment” chargebacks. Plus, transactions left unsettled for more than 48 hours will be automatically downgraded and receive substantially higher processing costs.

Be Careful When Logging Your Transactions

Ensure that incorrect sales receipts are voided and that transactions are processed only once. Entering the same transaction into a terminal more than once, or depositing both the merchant copy and the bank copy of the sales receipt with your acquirer, or depositing the same transaction with more than one merchant bank can all result in “duplicate transaction” chargebacks.

Keep Customers Informed On The Status Of Their Pending Transactions

If delivery of your customers purchase is going to be delayed, make sure to let your customer know about the delay as well as the new expected delivery date. Failure to do so could result in "non-receipt of goods" chargebacks.

Ship Merchandise Before Depositing Payment

Don’t deposit transactions with your bank until you have shipped the related merchandise. If customers see a transaction on their monthly credit card statement before they receive their merchandise, it could lead to a preventable chargeback.

Do you still have questions about chargeback disputes and how they can be avoided?

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