Chargebacks: A Necessary, But Manageable Evil

As in any other field of human endeavor, economics has its ups and downs, and with the everyday processing of millions of transactions all across the world, most customers and businesses walk away satisfied – each likely feels that the product, service, or funds s/he just obtained are worth the exchange, or else they wouldn’t have initiated the transaction in the first place – at least in a free market where competition can offer everyone other options from which to choose.

However, with adversity in all things, there are times when returns, exchanges, or other forms of rectification are necessary for customer service – an element of business not always the most pleasant, but certainly necessary for maintaining customer loyalty, satisfaction and, consequently, future purchases.

Vision Payment Solutions provides its clientele (merchants just like you) with superior transaction technology and support, as well as education through our website, our representatives, and our blog you’re reading at this moment. Today, we’re addressing the issue of chargebacks, what they mean to you as an entrepreneur, and best practices for managing them.

So, what is a chargeback? All of your customers have the right to dispute a charge to their credit card, especially when products or services are not provided by the agreed-upon time, when goods received are broken, cosmetically deficient, or non-functional, or when the transaction itself was not permitted by the card holder. A chargeback is the return of funds to the customer, implemented by the bank that initially issued the customer’s card. You, the merchant, are given a timeframe to respond to the chargeback request, submit evidence of the sale or the receipt of products or services sold, and receive credit for the original sales amount. This refund, of course, results in your loss of a sale – not something most merchants smile upon. However, there are a few essential ways to manage and prevent chargebacks.

Depending on the way you accept credit cards, there are several actions you can take to prevent your exposure to fraud or related issues, thereby preventing potential chargebacks. Additionally, it is very important, when processing credit card payments, that you accrue proper documentation; in the event a chargeback is initiated, having the proper documentation can assist you in winning the dispute.

If, during the process, the customer’s card is available, be sure to obtain a full magnetic strip read if possible; if the strip is damaged, get a legible, manual imprint. Check that the signature on the receipt matches the signature on the back of the card. Additionally, you should always post all sales policies clearly visible to customers at the cash registers, and even discuss some of the basics of returns and exchanges during their purchase.

If, however, the customer does not have their card with them, or if the initial transaction was online, use the Address Verification Service, only permitting transactions that match perfectly to be refunded. Furthermore, ship only to the card’s billing address, and require a signature upon delivery.

We hope these safety precautions will save you a great deal of financial and professional grief. If you have any questions, comments, or concerns about Vision Payment Solutions, the services we provide, or any of our own policies, or if you’d like to acquire a payment solution of your own, get in touch with a VPS representative – by calling (877) 674-2286 – today!