Chargebacks: A New Nightmare for Businesses

When chargebacks were initially originated, they were designed as a method of protection for consumers.  They were meant to allow customers to file a complaint and have money refunded in a more expedited fashion for wrongful transactions.  A typical chargeback occurs when a bank forces refund for a credit card purchase that their customer has disputed.  The industry has seen a turn of events over the last several years - consumers are taking advantage of the regulations in place to protect them.  This happens when a consumer files a fraudulent dispute by having funds returned to their banking account while also retaining ownership of the items or service that was initially purchased.

The number one reason that chargebacks have seen such a rise is that more consumers are using mobile devices to make purchases.  Sometimes a consumer’s misunderstanding is a part of the problem – consumers think that filing a complaint is a faster way to generate a refund instead of giving the business a chance to make things right.

However, more times than not, chargebacks are more indicative of fraud.  Consumers are trying to get monetary reimbursement and keep their merchandise at no charge to them. Excessive chargebacks can be destructive to merchants both monetarily and time spent providing paperwork and receipts.  Overall, they are a large burden for businesses: the length of a chargeback cycle can be months, and they will ultimately put a major hit on the business's bottom line.

Now that we have explained what chargebacks are and how they can harm a business, we want to share some ways to help reduce and eliminate chargebacks in your business.  Below are some steps that you can take to help protect you from fraudulent chargebacks, especially when you are taking cards that are not present:

·      Follow all rules and regulations created by the payment networks

·      Enrich your overall customer service for satisfying upset customers

·      Create a 24/7 customer service

·      Request the card verification number (CVV)

·      Use address verification service (AVS)

·      Develop a risk management plan that deals with fraudulent chargebacks and how your business will handle them

·     Create a “blacklist” of fraudulent customers – don’t allow them to shop with you again

·      Address any issues with shipping – make sure customers know if items are delayed or discontinued

·      Always monitor sales of digital goods

Unfortunately, there is no end in sight for fraudulent chargebacks.  The key is for your business to set up preventative measure to minimize losses.  By implementing our suggestions listed above, you will be able to reduce the frequency that chargebacks hit your business.  Be proactive to protect your bottom line.

If you want to know other ways to reduce chargebacks in your business, contact Apex Payment Solutions today!  We are not only your credit card processor; we are part of your business management team!

www.apexpaymentsolutions.com