Chargebacks can cost a merchant a significant amount of money. Many are results from very easily avoidable mistakes. The more you know about the proper procedures to take during a transaction the less likely you will be to make an error that could cause a chargeback. It is up to you, the business owner, to develop procedures, solutions, and policies that will help to reduce chargebacks. Appropriate training and attention to detail can help to resolve some of your chargeback problems.
Most chargebacks are caused at the end of a transaction. There are several reasons for a chargeback and you, as a merchant, can eliminate many of these by understanding what to do during the point of sale. Here are several steps to take to reduce chargebacks:
Always check the cardholder’s signature. This is a requirement for all transactions made in person. If a signature is not obtained the cardholder can later deny participation or authorization in the transaction. Make sure to always check the signature against the credit card – paying close attention to, and comparing, the writing. If the signature does not look the same ask for an additional piece of identification. If the credit card is not signed, ask the customer for another ID and have the customer sign their credit card. If the customer refuses to sign then DO NOT accept the card.
Make sure to hold on to the credit card during a transaction. This will allow you to do a quick check of the card’s essential features and to compare the signatures. If you immediately return it to the customer after swiping there will be no way to compare signatures on the card to the transaction receipt. Some credit cards have a digitized signature on the front and have a signature panel on the back. Just checking the digitized signature is not acceptable for ending a transaction. Always make sure to check the signature on the back with the hand-written signature on the sales receipt.
Never accept an expired card unless you acquire an authorization approval for the transaction. A “valid through” or “good through” date is good to the end of the month showing on the card. If an authorization request is declined – do not complete the transaction and do not repeat the request after a decline. Never try to get around the authorization system. Simply ask the customer for another form of payment.
To validate credit card information is smart, but using address validation provides added benefits. The Address Verification System (AVS) matches the entered address on the order form with the cardholder’s address on the billing statement. And since AVS has been developed only for few countries, for now, scrutinize orders from developing countries, since a large percentage of fraudulent online transactions are made of these developing foreign countries. You can also use the Merchant Category Code (MCC) code. mcc code list is used to categorize a business according to the type of business it provides. The mcc code list is assigned by merchant name or merchant name.
If you are using a third-party processor, let your customers know what name will appear on statements to eliminate confusion. This is because the company name that appears is usually that of the third-party processing company and not the company name of the site where they made the purchase. Suspicious orders should also be paid attention to; either you call or e-mail the customer to verify the order that has been placed.
Make sure that the information on the sales receipt is legible before finalizing the sale. If the receipt itself or the copy is illegible, it may be returned due to the fact that it cannot be processed properly.