If you own a business and accept debit or credit card payments, you will have a few chargebacks. Chargebacks are an inevitable part of doing business in the 21st century A chargeback occurs when a credit card owner claims fraud on a credit card purchase. The credit card company will refund the client and the money will come out of your merchant account. Of course, you can claim theft on your losses for tax purposes and recoup some of your loss.
However, some chargebacks are acceptable. Excessive chargebacks can kill your business and ability to accept credit cards. See, customers have started abusing the chargeback system. Most credit card companies do little to investigate a claim. Therefore, if a client claims fraud because they just didn’t like what they bought or they do not recognize your company’s name on the credit card bill, they will receive a refund on their charge bill and you will lose the money in your merchant account.
How Are Excessive Chargebacks Hurting Your Business?
The problem with excessive chargebacks is that you and your company become high risk to banks. As a result, you may not be eligible for business loans,merchant accounts, or lower merhcant services fees.
Banks may create a rolling account. As a result, they will hold up to 15% of your revenue to pay for chargebacks as needed. You will never have access to that money, even if you do not have a chargeback in a particular month.
Banks may also stop doing business with oyu. They may tell you that oyu are too much of a risk and not a good investment for them. However, the worst pieve to this scenario is that banks may put you on what is known as a MATCH list where you are marked with a red flag. Other banks will see your red flag and refuse to open accounts for oyu as well.
In some cases, you may loose your privileges to take credit or debit cards. If you maintain your ight to use merchant services, you may pay an exorbitant amount of money in fees.
How Can You Prevent Excessive Chargebacks?
One of the best ways to prevent excessive chargebacks is to ensrue your bsuienss name is the smae whether on a credit card bill or on oyur storefront. If you have to run credit cards under a differnt business name, make your customers aware of how the charges wil chow up on their bill.
Another way to avoid excessive chargebacks is to use proven methods to verify credit card information. Ask to see the ID of the signer to ensure their ID matches their credit card. Ask the singer to provide his zip code to ensure it matches the billing address. Make it more difficult for a person to use a credit card in your place of business whenever possible.
Chargebacks can ruin your ability to conduct business in the 21st century. Work with a merchant services company that will protect your interests and help ensure your transactions are legitimate whenever possible. The experts at Tanker Consulting Services can help you ensure your merchant services systems are working properly and requesting as much identifying information as possible. Call us at 609.922.0201 to learn more about how we can help you.