Accepting credit card purchases enables a business to increase sales by catering to customers who prefer to pay with a credit card. A chargeback occurs when a customer disputes the charge, resulting in the funds being returned to the customer if the chargeback is deemed legitimate. There are several reasons a customer might initiate a chargeback, from fraudulent use of a credit card to accidental chargebacks.
What Happens in Case of a Chargeback
Different banks have different procedures for handling chargebacks. The process typically takes two to three months to complete, during which time the funds from the sale are withheld.
When an issuing bank begins a chargeback procedure, the merchant is contacted. The merchant must prove that the purchase was legitimate, or the money could be returned to the consumer, who also gets to keep the product. The bank involved will typically ask for details regarding the purchase, and inform the merchant about the next steps. The bank will use the evidence presented by the merchant to make a decision.
During the chargeback procedure, merchants should not attempt to refund the customer on their own, as the customer will receive the funds in dispute automatically if the chargeback is deemed successful. Chargebacks also have fees that the merchant must pay whether the merchant wins the dispute or not.
What Merchants Can Do to Prevent Chargebacks
There are a number of things a merchant can do to prevent chargebacks, or at least avoid losing money due to chargebacks.
- The merchant should follow proper protocol when handling credit card transactions. Using a processor with sufficient security and payment descriptors greatly reduces the risk of fraudulent purchases that could lead to chargebacks.
- If a business provides services rather than products, it is always a good idea to have a contract detailing what is and isn’t involved in the service, so that the customers cannot argue that they didn’t receive the service they paid for.
- Providing good customer service is also key, as some customers may wish to resolve an issue before filing a chargeback if they feel that they can trust a merchant to resolve the matter in the best manner possible.
- Training employees to look for signs of fraud is also essential in reducing the risk of fraudulent purchases.
How Fattmerchant Can Help With Chargebacks
Many merchants choose to work with merchant services solutions provider Fattmerchant. Fattmerchant has a team dedicated to helping merchants deal with chargebacks, working to resolve chargeback issues quickly and in the merchants’ best interest. Businesses working with Fattmerchant know that they have a partner they can rely on to be on their side.