Chargebacks: How to Avoid Them in Merchant Services

An online debit or credit card payment is now an option in businesses with online payments. By using this option, you can increase your revenue, improve your sales productivity and boost your customer base. In order to do this, you must have a merchant services software applied to your payment options. Using this software has risks, as chargebacks can occur.

Every once in awhile, a chargeback occurs in online payments. If a customer is unknown to chargebacks, the best explanation you can give them is that it is an added security in their financial institution to boost customer confidence by making sure all payments are legitimate. However, if you are running a business, it could be a very expensive hassle if you have chargebacks. Not only it is expensive, you will lose time and money to do research, call the affected parties and possibly give refunds, lose your product and get negative feedback for that experience or lose revenue. This article will explain how chargebacks work and how you can avoid them if you have merchant service providers.

What Is a Merchant Service?

A good definition of merchant services is that they are an authorized financial institution or service that permits a business or company to let their consumers use credit or debit card payments online or POS (point of sale) systems. In order for you to utilize merchant services, you need to get a merchant account that accepts your consumers’ card information using an e-commerce site. It is a great solution for online transactions.

What Is a Chargeback?

A chargeback can occur if a credit or debit card payment is disputed. This can be done by your customer or their financial institution. Once a chargeback happen, the total amount of the sale will be removed from the account of stated on file through your merchant account. The reasons can vary. It could be that they accidentally used the wrong card; someone did not have the authority to access their account or was not satisfied with the products they received.

Even if the dispute was proven untrue, chargebacks undergo a long process before the matter is cleared. Additional services such as bank fees may occur, which is not good for your business. You need to find out more about why chargebacks happen and how to avoid them. Using the top merchant services greatly reduces the risks of this happening because they give you notifications if an account is a possible fraudster or is suspicious.

What Are the Common Reasons for Chargebacks?

Below are some of the reasons why chargebacks occur:

1. The card was used without consent.
2. The card was reported missing or lost.
3. There was no proper authorization.
4. The charged amount was incorrect.
5. The product or service purchased was incorrect.
6. The product was not delivered or provided.
7. The product was of poor quality.
8. Processing errors.
9. Invalid information was entered.
10. No supporting documents or information was provided within the timeframe for retrieval requests.

These are just the possible scenarios of a chargeback. Check out CrowdReviews.com’s merchant service provider reviews to know more about merchant services and what their policy is for chargeback incidents or concerns.

What Are the Rates of Merchant Services?

The cost of merchant services varies. It may cause headaches or confusion if you are not familiar with the terms they use. In choosing merchant services, you must make sure that the rates fees are clear and read your contract before signing anything.

A merchant account permits you to use and process credit or debit card payments. It is a must that you understand all the rates and fees that they implement and make sure that it is within your financial budget to be profitable. Merchant services fees include:

• Address verification fees
• Transaction fees
• Chargeback fees
• Gateway fees
• Statement fees
• Monthly minimum fees
• Cancellation fees

There are a lot more fees that can be associated with merchant services. Ask them about their fees and an explanation why you have to pay for it. Keep a look out for hidden fees. Before signing a contract, ensure that you understand everything included in it.

What Are the Benefits of Merchant Services?

As online business grows, more and more people are using credit or debit cards to pay. Because of this, cash and check payments are becoming less popular with businesses. A merchant account provides many opportunities to add value and service to your business. Here are some of the advantages of merchant services that you can get:

1. Accepts debit and credit cards. Of course, the main benefit of merchant services is accepting debit and credit card payments. This is not only beneficial to businesses but also the consumer because it’s convenient to use and is accessible.
2. It increases sales productivity. Using debit and credit card payments can greatly impact the overall growth and sales of your company.
3. It has better management to money. It has you streamline your payment transactions, keeping you organized by having the ability to manage your cash flow and forecast it.
4. It avoids any bad checks. The use of merchant services and permitting electronic payments can help your business prevent any inconvenience and extra costs caused by bounced checks.
5. It provides convenience to customers. If a customer is happy, chances are they will tell everyone of their positive experience. Not only there is a chance of them returning back to your company and purchase your products or services, it is highly likely to gather more customers. They are given many options in purchasing. If you have recurring billing options, your customers will have the sense of security of making sure their card information is secure. Additionally, getting merchant services will make your payment option for credit and debit cards fast, simple and reliable.

How Do You Avoid Chargebacks?

Merchant service providers help you in growing your business but there are times that your customers can file a dispute with their payments. While chargebacks are not entirely avoidable, here are some steps you can take to help prevent them.

1. Document everything as much as you can. Get all the details of a payment before processing it. By having a lot of information included in the payment, the likelier that the customer willingly added the information for the purchase.
2. Verify the customer’s billing and shipping address. Just because you are doing online transactions, it does not mean you can’t ask verification questions to confirm that they are the rightful owner of the card, the address matches and is authorized to make the payment.
3. Be understandable yet specific with return and refund policies.
4. Respond queries as quickly as possible.
5. Let the customers know the information that will show up on the credit card statements. Make sure that the name should match the details.
6. Collect physical or electronic signatures once the products or services are delivered.
7. Verify their identification by asking for supporting documents such as a copy of the I.D.

What Are The Things to Consider in Merchant Services?

Adding an online shopping option in your business is a big step. There are hundreds of competitors that you can choose from in this kind of industry. You can’t just get the top merchant services without finding out more information about them. If you are considering getting merchant services, make sure you done research on the following:

1. The company is reputable. Find a company that you can trust. Not only that, they have enough experience to back you up and explain any queries regarding merchant services.
2. The company should provide 24/7 technical and customer support if you have any inquiries or technical issues.
3. The company should be updated with the latest software and equipment.
4. The company should explain what would be included in your contract or the terms you would agree to.
5. The company should have a standard pricing model. Standard pricing models have three standards: the flat rate, the limit pricing or cost-plus pricing and the tiered pricing.
   1. The limit pricing model is ideal for businesses that process payments in small volumes monthly. You may need to pay additional fees per transaction if you exceed it.
   2. The tiered pricing model usually has three stages: the non-qualified, the mid-qualified and the qualified tiers. They process the rates and costs by bundles or how many transactions they can purchase.
   3. The last is the flat rate pricing model. As the name suggests, it is a pricing structure where you pay for a fixed fee no matter how much your usage is.

Arming yourself with vital information to prevent chargebacks can help you greatly in saving money. Aside from chargeback fees, there are other ancillary fees that may be related with merchant providers. Always ask questions if you don’t understand the fees that are included in your contract. If you are still confused with chargebacks and other fees merchant services may have, read CrowdReviews.com’s merchant service provider reviews to help you understand more on what it is.

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Jeev Trika

Jeev is an executive leader with successful experience building research portals which recommend the best products and services in various highly competitive verticals.

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