Anyone who has been in business for an extended period of time understands what chargebacks are. They're nasty buggers that drain profits and threaten the success of your business. They cause you to curse the cardholder and the issuing bank for causing you this frustration. However, there is a very good chance you hold some of the responsibility. The vast majority of chargebacks can be prevented and here are steps you can take to protect yourself.
1. Detect and Prevent Fraud
Visa offers a list of tips that help merchants identify fraud. Check this list and become familiar with the fraud indicators. Be vigilant about checking these types of transactions because if you identify one or more of these 12 indicators, fraud could be present and you need to proceed with caution. You should also be aware of one more indicator Visa didn't include on the list. Watch out for order forms that are completed in all capital letters or sans important information (like the last name).
2. Take Advantage of the Tools Provided by MasterCard and Visa
Both MasterCard and Visa offer additional protection to merchants. Take advantage of often unnoticed security tools such as:
- Card expiration date
- Address Verification Service
- Card Verification Value (also known as CVV or CVV2)
- Verified by Visa
- MasterCard SecureCode
Related: Get quotes from one of our vendors to start accepting credit cards and boost your small business bottom line.
3. Take Advantage of the Tools Provided by the Payment Processor
Your credit card processor has additional resources to help merchants like yourself avoid fraud. Use them to your best advantage.
Your processor can help you create a blacklist, i.e. a list of people who are not allowed to process transactions with your business. For example, you might find someone at a specific IP address has been engaging in fraudulent behavior. That IP address can be blocked from future credit card transactions with your company. You can also blacklist entire countries or a particular email address.
A whitelist is basically the opposite of a blacklist. With a whitelist, you ban everything. Then, you specify the exceptions to the ban. For example, you might block all countries except the US and Canada.
You can easily set a maximum purchase limit. This will stop criminals from racking up a huge bill on a stolen credit card.
Your processor can help you block anyone who attempts to process a transaction with the same credit card multiple times in a set time frame. You can also block anyone who uses the same IP address to make multiple transactions in a given span of time. For example, an IP address can't attempt more than four transactions in two minutes. This will block anyone who is trying to run through a list of stolen card numbers.
Make sure your company name appears on the customer's credit card statements as something they will immediately recognize.
5. Provide Excellent Customer Service
First, only provide the best products and services. Low quality products will lead to unhappy customers which could lead to chargebacks. Second, make sure your return policy is easy to understand and access. Include links to your policy page in the product descriptions and order confirmation email. Lastly, make sure customers have access to your contact information. Make it easier for them to call you than the bank.
6. Don't Charge the Card until the Product Has Shipped
If a product is backordered, don't charge the card as soon as the order comes in. If you charge a customer's card and then wait months to follow through on the delivery, you're asking for trouble. If you want help instigating these changes in your company, consider hiring a professional. Fighting chargebacks, improving customer service, detecting fraud, and managing chargebacks are all a little bit easier with some professional assistance.
If you know of any other suggestions we left off the list, let us know!
Author Bio: Jessica Velasco is a freelance writer who shares information about SEO, marketing, customer service, and more. Right now, she is working with Chargebacks911 to educate business owners about improving profits via chargeback management. If you want to get in contact with Jessica, look her up on Google+. (Image Source: freedigitalphotos.net)