Archive for August, 2007

Internet Merchant Account – Preventing Chargebacks (part 3 of 3)

Monday, August 27th, 2007

Use your business name, website address and/or 1-800 number as your identifier. Your identifier is the information that shows up next to the actual charge amount on your customers credit card bill or online account. Many people dispute credit card charges just because they don’t recognize a charge on their credit card bill and don’t take the time to investigate it. Make it easy for them to remember you by keeping your identifier up to date. This can be easily done just by contacting your current credit card processing company.

On larger (CNP) card not present transactions (over $100) obtain an authorization via e-mail or fax. E-mail or fax your customers a credit card authorization form that requires them to provide the name on the card, card number, billing address, expiration date, CVV2 code, and cardholder signature. To create a sense of urgency require them to send it back before you’ll ship their order. This is a great way to confirm their order and capture an authorization at the same time.

Take care of your customers – A big reason most people use their credit cards for online and phone purchases is because they know the credit card issuer will protect them. If they buy something and they don’t receive what they ordered or expected and the merchant won’t correct the problem they will get their money back if they successfully dispute the charge. Bottom line -do the right thing and deliver as advertised because if you don’t you could not only lose the product you shipped but the money collected as well. During the dispute process the burden of proof is on you…the merchant.

Communication is the key – As long as you communicate with your customers you should be able to keep internet merchant account chargebacks at a minimum or not have them at all.

Michael Rupkalvis

The Transaction Group

Internet Merchant Account – Preventing Chargebacks (part 2 of 3)

Monday, August 20th, 2007

Chargebacks can cost you not only money but time as well. Consider the following tips covered in the next two posts about preventing chargebacks and you should be able to reduce the amount of customers that dispute a transaction or wipe them out all together.

Obtain a signature from your customer authorizing the charge. If you have a terminal that prints out a receipt be sure to have them sign it and keep it on file for at least 1 year. If you take orders face to face but “key” your transactions buy a manual imprinter so you can capture an imprint of their card on a receipt and have them sign it. If you take orders over the phone or have a internet merchant account e-mail your customer a receipt and have them sign it and fax or e-mail back before shipping.

Have your shipper obtain a signature when delivering your product. Most major shippers offer this service and during the dispute process the burden of proof is on the merchant…not the customer.

Ship the product before capturing funds and depositing. If there is a long delay between the time the order is placed and actually shipped you can break up a credit card processing transaction into 2 steps. You authorize it at the time of the sale so you can be sure it’s a good card and funds are available and then capture the authorization once the product has been shipped.

Keep your customers informed of the status of their order. Let them know upfront how soon they can expect their order to be shipped and follow up with tracking information once shipped. Not only will this help reduce chargebacks but it will also cut down on unnecessary e-mails or phone calls.

I’ll give you more suggestions in part 3 of Internet Merchant Account – Preventing Chargebacks.

Michael Rupkalvis

The Transaction Group

Internet Merchant Account – Preventing Chargebacks (part 1 of 3)

Tuesday, August 14th, 2007

Merchants that process with an internet merchant account or process card not present transactions (keyed) tend to have more chargeback problems than traditional merchants that process card present transaction. Reduce your chargebacks when credit card processing online by taking extra precautions listed in this 3 part series.

During the next 3 posts I’ll define what a chargeback is and steps a merchant can take to reduce chargebacks or stop them altogether.

What is a chargeback?

A chargeback is the end result when a processor reverses a transaction and withdraws the funds from the merchant’s bank account due to the cardholder disputing the original transaction. Cardholders can dispute a transaction for many reasons such as: service or product never received, not satisfied with quality of product or service, does not recognize the merchant that charged their card or didn’t authorize them to charge their card in the first place.

When a cardholder disputes a transaction this action generates a retrieval request. The processor contacts the merchant and retrieves information specific to the transaction in question. The processor will normally ask for an invoice, proof of authorization, proof of shipping and that the cardholder actually received the product or service. On larger transactions the processor will actually call the cardholder to confirm they authorized the transaction, received the product or service, and they’re the actual cardholder. The funds in question are withdrawn from the merchant’s bank account and held by the processor until a decision has been made. If the processor rules in favor or the cardholder this results in a chargeback and the cardholder being credited for the original charge.

Taking into consideration the merchant not only loses the funds from the original transactions but is also charged additional fees for the chargeback and retrieval request it’s critical a merchant takes the proper steps to reduce chargebacks or stop them all together.

In parts 2 & 3 I’ll discuss steps a merchant can take to prevent chargebacks.

Michael Rupkalvis

The Transaction Group