One of the main problems for company’s that use business credit card processing is charge backs. They are expensive and a hassle but they are a fact of life for a lot of the small businesses that want to accept credit cards. Even so, there are a few ways that you can protect yourself against fraudulent charge backs.
What is a charge back?
This is when a customer calls their credit card service provider to dispute a charge. This is supposed to only be done if the charge is fraudulent but unfortunately people do it to get money back on something they actually did by. Not only do you lose that money but charge backs also have fees that can cost you anywhere from $15 to $100.
How can you offer business credit card processing and prevent charge backs?
Follow the processor protocol.
Each individual credit card processor will have protocol regarding accepting credit cards. If the card is being accepted in person then the employees need to check the expiration date and security code on the card. If the card is being used online then the processor may require additional information to verify the purchase. Make sure that you are clear on the processes for each credit card issuer before agreeing to accept them.
Get everything in writing.
Every agreement and contract for anything should be in writing, that includes business credit card processing services. Having customers sign a detailed agreement before they use their credit card will help to show the credit card issuers that the card user knowingly agreed to your terms. You will likely be found in favor if you have something like this and can submit it to the credit card company.
Deal with things right away.
Set up charge back notifications with your business credit card processing company so that you can find out right away when this happens to you. If you find out that a customer is disputing a charge while it is going on, you can stay in front of the issue and try and solve it quickly rather than having to try and get it back after the dispute is closed. That makes it a lot harder to do.
Learn to recognize fraud.
If someone uses a credit card fraudulently then the rightful owner is going to dispute the charge. You need to be able to stop fraud in its tracks so that you aren’t issues a charge back later on. You should have protocols in place to help you spot the warning signs for fraud. It’s also a good idea to train your employees so that they are able to see it to. They should be trained in both card present and card not present transactions as well.
Keep good records.
Having decent credit card software to help you keep your records organized is a good idea. You should have either a physical file or a digital file where all your records are kept in tact and organized. If the credit card issuer wants to see something about a particular transaction, you should be able to find it without to much of a problem. This is particularly true when it comes to customer’s transaction dates, the amount they paid and their authorization information. If the charge itself is fraudulent, this information isn’t going to help you but if someone is trying to unfairly use the charge back service or forgot that they made a purchase, this will help things go better for you.
Pick your battles.
Some charge backs are actually going to be legitimate. Or maybe they just really aren’t worth pursuing that much. Pick and choose which charge backs you want to fight. Make sure it is the ones that you know you are going to win otherwise you will spend money for nothing. It might even be a good idea to hire a charge back manager to take care of things for you. You don’t want to end up hurting your relationships with merchant account providers.
Credit card payment processing services are always a good idea to offer so that you can make as much money as possible. However, it is not without its risks entirely. But if you follow the above tips, you’ll be a lot safer.
