The best way to deal with a chargeback is to prevent it from happening in the first place! Most chargebacks kick off right at the point of sale, but with a little training and attention to detail, you can drastically reduce your risk.
Here are 10 key tips to help reduce the risk and protect your business from costly chargebacks:
At the Time of Charge & Transaction Processing:
-
Never Force a Declined Transaction: If a card is declined, do not try to authorize it again immediately. Ask for another form of payment or have the customer call the number on the back of their card. Forcing a transaction after a decline frequently results in a chargeback.
-
Embrace EMV (Chip & Contactless): Always use your EMV reader for face-to-face transactions with chip cards or contactless payments. If your terminal isn't working, you can key-enter the card info, but always capture AVS (Address Verification Service) and CVV (Card Verification Value). Even if you get an authorization, a missing AVS match can lead to a "no authorization" chargeback if the cardholder disputes it.
- Need an EMV Terminal? You can order one directly from your Virtual Terminal. Just click More, then Order Supplies on the left sidebar.
- Update AVS/CVV Settings: To ensure you're always capturing this vital info, check your account settings. See: How Do I Change My AVS Security Settings?
-
Get That Signature! While not mandatory, a cardholder's signature on the receipt is still a recommended best practice. It serves as strong evidence in a dispute.
-
Process Transactions ONLY Once: Avoid "duplicate transaction" chargebacks by ensuring you only enter and deposit each sale once. Don't process the same transaction multiple times.
-
Void Incorrect Sales Immediately: If you make a mistake, void the incorrect sale receipt right away. Only process the correct transaction once.
Policy & Communication Best Practices:
-
Clearly Display Policies: If you have policies for returns, refunds, or service cancellations, make them visible! Print them on your sales receipts (near the signature line, clearly visible on all copies) or display them prominently in your place of business. Not disclosing them puts you at a huge disadvantage in a dispute.
-
Process Credits Promptly: If you owe a customer a credit, process it immediately, preferably the same day. Delays can lead to "credit not issued" chargebacks.
-
Manage Recurring Billing Cancellations: If a customer asks to cancel a recurring service (weekly, monthly, etc.), cancel it immediately as they request. Always confirm the cancellation in writing, stating the effective date. Failing to do so almost always leads to a chargeback.
-
Keep Customers Informed: Good communication goes a long way!
- Delayed Delivery? If merchandise or a service will be delayed, notify the cardholder in writing with the new expected date.
- Out of Stock? If an item is out of stock or unavailable, inform the customer in writing. Offer them the option to buy a similar item or cancel the transaction entirely. Never substitute an item without their explicit agreement. Clear communication here can prevent many disputes.
-
Ship Before You Charge: Don't process a transaction until you've actually shipped the related merchandise. If customers see a charge on their statement before they receive the product, it's a common trigger for preventable chargebacks.
Other Helpful Reference Articles Regarding Chargebacks: