WHAT ARE CHARGEBACKS?
A chargeback put simply, is the reversal of a credit card transaction. A credit card provider makes a demand, on behalf of the cardholder, for a merchant to make good on the loss of a fraudulent or disputed credit card transaction. The money that was once deposited into the merchant’s account after a transaction is taken out and given back to the customer as a credit if a chargeback goes through.
Chargebacks are a lazy way of requesting for a refund. Consumers go directly through their bank to retrieve a payment back rather than requesting a refund directly from the merchant.
Banks allow for this method to be used if one of the following occurs:
1. A transaction is processed after the issuing bank has declined it
2. No authorization
3. Card was expired yet the transaction was still processed
4. When the merchant did not process the transaction in time
5. The account number given was wrong
WHY ARE THEY IN PLACE?
Issuing banks are allowed to complete such a request due to fraudulent activity and/or unsavory business practices. The main goal of the chargeback process is consumer protection against fraudulent activity.
WHY SHOULD YOU BE CAUTIOUS OF THIS?
Chargebacks are completed without warning to merchants, and all business owners that process card payments are at risk of chargeback fees. With chargebacks, business owners do not have the opportunity to recover their product. Unlike a refund, where a customer has returned a product or notified you of an issue where you have agreed to refund some or all of the purchase price, a chargeback is often a surprise. The more chargebacks completed against your business, the higher your risk of having your card payment processing abilities be revoked are.
WHO DO CHARGEBACKS AFFECT?
Merchants are affected as they lose the product, pay double in fees and require markup on products in order to compensate for those fees and take valuable time to dispute. More chargebacks can ruin your reputation in the eyes of acquiring banks especially if you are a highrisk
Does this scare you? Join us tomorrow for our webinar on chargebacks with Chargebacks911 to learn how to protect your business.
Chargebacks are scary. And trying to determine where your chargebacks are coming from can be an intimidating job. What’s worse, chargebacks rob you of profits and undermine your efforts to grow your business. This 45-minute webinar will cover the major cause of chargebacks and how to minimize them.
Date: Tuesday, October 29, 2019
Time: 2:00PM – 3:00PM EDT
Who should attend:
• Chargebacks Management Teams
• Payment and Fraud Managers
• Finance Managers
• Customer Service/Success Managers
Andrew Koloshuk, Merchant Broker
Don Bush, Chargebacks911