Charges can accrue drastically during the holiday shopping season. If you are caught in the middle of a holiday shopping season frenzy, chances are you’ll overlook the potential of credit card chargebacks. While it’s okay to process the orders promptly by clearing items in your shopping cart solution and backend system, it is equally important to pay attention to credit card chargebacks. Do not get overly consumed in checking the competitive pricing, free shipping, and prime customer service offered by other shoppers during this season. Pay some attention to chargebacks as well.
So there, what exactly is a chargeback? Chargeback entails reversal of previous sales transaction when a cardholder or card issuer refuses or disputes a charge posted to their account. Chargebacks are designed in the interest of a cardholder or card issuer, for protecting them against fraudulent use of their accounts and non-receipt of goods.
Chargebacks is a frequent corollary of an established dispute resolution process that favors the cardholder or card issuer. For instance, the following situations can generally result in a chargeback:
- A cardholder fails to recognize the transaction or amount on their credit card statement,
- The same transaction appears several times on a cardholder’s statement,
- An incorrect account number is captured, as a result of which the transaction was sent to the wrong account, or
- A transaction was processed for an incorrect amount.
In some cases, merchant banks approve chargebacks since the items shipped were either damaged or different from those described in catalogs or online store page. This approval process does not take into account if the merchandise was returned or not.
This practice is susceptible to abuse, as online shoppers, in hopes to obtaining a product for free, may ask for a chargeback. However, many times inquiries are genuine, or simply made out of ignorance or forgetfulness.
Several merchant banks charge fees for inquiries related to chargeback. In case a cardholder does not recognize a charge while filing a dispute, just be reminded that you still have to pay a fee, which ideally ranges from U.S. $ 10 to U.S. $ 25 per inquiry. These charges can accrue drastically during the holiday shopping season.
Here are a few steps to reduce the number of inquiries made against your account:
- State clearly on your website how the charge will appear on your customer’s credit card statement. This information should be made available during and after the checkout process. In addition, send a post-order follow up email after one or two weeks.
- Ensure that your business telephone number is displayed on the charge appearing on your customer’s credit card statement. If you do not have a toll-free number, specify an alternate number where your customers can place such inquiries.
- Make sure you do not charge credit cards for pre-ordered items. Charge the card when the specified item is available in your stock or has been shipped to the consignee.
- In case of mistaken charges, promptly void them before the cardholder files a dispute. For returned items, credit accounts immediately. Waiting too long is not advisable in both these cases. The cardholder may be forced into thinking that you are out to short-change and will use the easiest available method to receive credit. In some cases, credits may not appear on the cardholder’s current or next statements. Be sure to explain this situation to the cardholders, offering them a transaction number as proof.
- Initiate a dialogue with your customers by sending follow up emails and inviting them to contact you with their issues.
- Do not ignore any requests from your customers, however small it may seem to be. Answer each in a timely fashion. While responding to errant customers during a phone call, maintain a polite tone all the time.
Finally, any approach you take to resolve or prevent credit card disputes from happening, always remember to put your customers ahead of you.
