How to Reduce Credit Card Chargebacks
As a merchant who accepts credit cards, you know that credit card chargebacks can certainly happen. You also know that these chargebacks can be frustrating as well as expensive, as you end up paying a fee to your payment processor. Learning what you can do to prevent and reduce credit card chargebacks can reduce this headache now.
The first thing you should do to reduce credit card chargebacks is to examine the card carefully if the customer is present. Common sense can go very far in reducing fraud and chargebacks. If the name doesn’t match when you check against a photo ID, do not accept the card. You should make sure that the customer’s signature matches the signature on their credit card or license as well. If your customer gets angry or upset by this, explain it is to reduce fraud and identity theft. If they still do not like it, you very well may have just saved your business from a chargeback.
Another great way to reduce credit card chargebacks can, according to VISA, reduce chargebacks by up to 26%. This method is to simply ask the customer for the 3 digit security code on the back of their card. It is called the CVC2 or CVV2 number. It can also reduce other fees, but the method will only work if the credit card is accepted via the internet or phone. You should make sure any internet sales page has a place to put this number and you should always ask for it when accepting orders over the phone.
If you really want to reduce your credit card chargebacks, especially online, you will want to double and triple check any orders coming from abroad. Most fraudulent orders coming from foreign countries online will come from Russia, Indonesia and the central African countries. If you are getting orders from these areas, you are perfectly within your right to request faxed copies of a photo ID and the front and back of the credit card before accepting the order.
The final way to reduce credit card chargebacks will come into play if you are using a third party processor to accept credit card orders. Usually when the customer gets the invoice, the name of your company will not be present, but the name of the processing company will be. Some customers may simply be confused. You should always make sure you mention on your website or on the original receipt that this is actually your company, but the invoice or packing slip may come from another company.
Taking the steps to reduce credit card chargebacks can be highly beneficial to your business and none of them will take more than a few minutes of your time. The average fee you will pay to your payment processor will be about $25 each time, though it depends on what you sell and the company you are using. Taking a few minutes from your day to save $25 is worth it to most companies, especially small businesses. When you use the tips above, you should see chargebacks reduce quickly.
