Merchant Account Blog & Credit Card Processing Blog

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Understanding your merchant account and the risk associated with it are very important, when it comes to avoiding disaster. Merchant account risk can vary from business type to business type. Lets look at a “Retail” business first. A customer comes in your store and purchases $300 worth of merchandise. You run the credit card and customer signs receipt. In this senario the purchase was made with a stolen credit card. Thirty days from now, the true card holder receives their statement and disputes the charge. Guess who is responsible for that charge…the merchant. The merchant has received stolen money and the charge will be reversed. This is just one risk associated with a merchant account.

Another senerio for “Ecommerce”, you receive an order huge order for 10,000 Widgets and run down to your post office to ship it. Three weeks from now the customers call his credit card company and says, “I did not receive the order”. You have not proof that you mail it or he received it, becuase you used the post office. This charge will be reversed at your expense.

You need to be aware of the risks and try to avoid problems. A sound plan for avoiding chargebacks should be put in place and you should always be aware of potenial problems. We put together a pdf about avoiding the pitfalls of a chargeback, take a look.

If you have any questions about merchant account risk or avoiding chargebacks, please give me a call.

MARK SANDS
1st National Processing
http://www.usa-merchantaccount.com
1-866 828-8683

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Understanding the term “Chargeback” is the first step in preventing them. A “Chargeback” is when a customer calls their credit card company and disputes charge on their statement. This dispute has the potential of turning into a “Chargeback”, which is a forced reversal of the charge from your account back to your customers account. Keep in mind that it comes with penalty fee per occurrance and if you get to many chargebacks within a given month, your account will be closed for “Excessive Charrgebacks” and under Visa / Mastercard Rules, placed on a Terminated Merchant File.

With that said, you can see that “Excessive Chargebacks” can destroy your reputation and the future of your business. So lets analyize the process and how to prevent them. First, when a customer makes the initial dispute, you will receive a “Retrieval Letter” requesting that you provide information on the transaction in question. You have only 7 Days to respond to the “Retrieval Request”. If you do not provided the requested documents within the time-frame, this transaction will become a “Chargeback”.

Now you need to analyize why this happened and take steps to keep this from happening again. Ask yourself, “What Can I Do Differently To Avoid This In The Future”. Below are somethings to consider:

1) Did the customer remember my Business Name and the fact they made the purchase ?

2) Did I ship the product in a Timely Manner from the time I processed the credit card ?

3) Do I have evidence of shipping, such as Signed Receipt from Fed-Ex, UPS, DHL, USPS ?

4) Do I have evidence of a Signed Credit Card Receipt or Manual Imprint of the card ?

5) Is my Customer Service Phone being answered to address potential customer problems ?

6) Do I need to change my “Return Policy” and be more understanding to customer issues ?

7) Am I on the Alert For Credit Card Fruad and using methoods set-forth by Visa / MasterCard ?

The above 7 questions will usually give you the answers to how Chargebacks can be avoided in the future. You must use common sense and make a honest assessment of the situation. Don’t fool yourself and think that this won’t happen again, because if their is a problem somewhere, it will happen again.

Remember that accepting credit cards is a “Privilege not a Right” and if you abuse that privilege, you may not be given a second chance. Stay out of trouble !!!!!!

If you have any questions about Preventing Chargebacks, feel free to give me a call.

MARK SANDS
http://www.usa-merchantaccount.com

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