Though payment disputes can be frustrating, you should respond to them promptly, says Lamar. “Start with the customer,” he suggests. “Many friendly fraud issues are related to customers who have an issue with their purchase but think it may be easier to dispute rather than working directly with the merchant.” It’s also important to collect proof that transactions were authorized by the cardholder, especially for e-commerce purchases. The more evidence a merchant can provide to support the legitimacy of a transaction, the better their chance of overturning a chargeback. Should you fail to respond — or the dispute is found in the customer’s favor — the funds will be returned to the customer.
The following tips can help reduce the frequency of chargebacks:
- Obtain proper authorizations for all card transactions, such as customer signatures, PINs, address verification or CVV codes (three to four digits found on the front or back of the card).
- Ensure all transactions are approved (not declined) by the issuing bank.
- For online purchases, verify that the cardholder was advised of the purchase details and given the option to confirm or cancel at the time of the transaction.
- Wait to process transactions until the merchandise is shipped or delivered.
- Ensure all transactions are processed accurately with the proper transaction code and in a timely manner.
- Make sure your registered business name on the payment system matches or is at least similar to the one on the cardholder’s statement.
- Obtain the customer’s or other designated person’s signature for proof of delivery when merchandise is delivered.
- For subscription-based transactions, obtain customer acknowledgment and agreement to your recurring transaction agreement, and provide notice to the cardholder prior to each recurring transaction.
When you’re running a business, chargebacks are inevitable. But if you’re prepared, you can reduce their frequency. Source
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