If your business accepts credit cards, sooner or later you’re going to face the dreaded chargeback. Chargebacks can be a significant source of revenue loss–so make sure you understand what they are, how you can fight back and reduce chargebacks.
What is a chargeback?
When a consumer disputes a credit card charge, the credit card issuer investigates the complaint. If they find in favor of the consumer, the transaction is reversed and the funds are withdrawn from the merchant’s bank account and credited back to the cardholder. The merchant not only loses the funds from the original transactions–they’re also charged additional fees for the chargeback and retrieval request.
Chargebacks aren’t all bad. A big reason people use their credit cards for online and phone purchases is because they know the credit card issuer will protect them. If they don’t receive what was ordered or expected and the merchant won’t correct the problem, they can dispute the charge and get their money back. If it weren’t for chargebacks, merchants would have a much harder time convincing people to buy things online!
How Can I Reduce Chargebacks?
Instabill knows that not all chargebacks are legitimate. Chargeback fraud can hit your business hard, so our risk assessment department has put together a list of 6 ways to fight chargeback fraud:
- Take care of your customers. If you’re concerned about chargebacks, this is a no-brainer: Deliver as advertised. Honest customers won’t initiate chargebacks if they’re happy with the goods or services you provide.
- Use Address Verification Service (AVS). Decline orders that do not provide a valid billing address.
- Require Card Security Codes (CVC). Decline orders that do not provide valid code.
- Use a Trackable Shipping Service That Will Obtain a Delivery Signature. Get proof that your goods were delivered as promised.
- Obtain a signature from your customer authorizing the charge. Consider e-mailing customers a receipt, and have them sign it and fax or e-mail back before shipping.
- On larger transactions (over $1500) obtain an authorization via e-mail or fax. E-mail or fax your customers a credit card authorization form that requires them to provide the name on the card, card number, billing address, expiration date, CVV2 code, and cardholder signature.
Instabill’s gateway is equipped with AVS and accepts orders with CVC codes to help you reduce chargebacks. The Instabill team is always working on new ways to assist and protect the merchants that we partner with.
