As a small business owner, you work hard to create outstanding experiences for your customers. Whether you’re cooking the perfect meal at your restaurant or curating the best products in your shop, you give your small business your all.
But sometimes, things don’t go as planned. Like when you get hit with credit card chargebacks and credit card disputes.
Chargebacks are easily one of the most frustrating aspects of running a business. The good news? Get Beyond is here to help. In this article, we’ll cover the basics of credit card chargebacks and disputes, as well as some best practices to help you avoid them. Â
What is a Credit Card Dispute/Chargeback?
A credit card chargeback or dispute is when a customer requests that their credit card company or bank remove an incorrect charge on their statement. Chargebacks and disputes usually fall into three categories: a billing error, fraudulent or unauthorized charges, or issues with the quality of goods and services.
A chargeback or dispute is different from a refund in that the customer goes to their credit card company or bank to dispute the charge—not the merchant. If a bank agrees with the cardholder regarding the dispute, it will be elevated to the chargeback stage. When a cardholder dispute becomes a chargeback, the merchant becomes liable. While in general, cardholders have several months to dispute a charge, on the other hand, merchants have a limited timeframe to dispute a chargeback.
With Get Beyond, we make it easy to handle disputes. Our online portal not only offers you a quick way to respond to a dispute but also provides near real-time e-mail notifications and the history of a dispute.
Chargeback Fraud
One thing to be aware of is chargeback fraud, or “friendly fraud.” This is when customers fraudulently try to obtain a refund by using the chargeback process. An example of this would be missing the return period for a product, and instead turning to the chargeback process to attain their money back.
As a business owner, this can be extremely frustrating as merchant acquiring banks will generally charge a fee to merchants for chargeback transactions.
Best Practices to Avoid Chargebacks
While merchants can dispute chargebacks, the process is costly, takes time and effort to respond to a dispute, and in some cases may end up in additional losses. Unfortunately, chargebacks are part of the industry, and in some cases, they cannot be avoided.
Luckily, as a small business owner, there are steps you can take to minimize chargebacks:
Dip Is Best
Inserting an EMV card into an EMV terminal is the best way to be protected against fraudulent disputes.
Contactless Transactions
If a contactless transaction is not going through, insert the card. Do not key a card from a smartphone.
Avoid Keying Transactions
If a customer is physically present, or will be, always have them swipe, dip, or tap the card instead of keying transactions.
Refunds
Make sure that all refunds are processed on the same card the sale is processed on.
Return Policy
Have a clearly displayed return policy in the store and on the receipt. If possible, have the refund/cancellation policy signed by a customer.
KYC – Know Your Customer
Make sure that you complete due diligence on your customer if you are shipping the product on key-entry sales
Transaction Verifications
Enter the address and zip code with the CVV2 code and make sure you get the match for card not present transactions
Shipping
Ship to the billing address as often as possible
Signature
Request signature confirmation on all shipped orders
Tips
If a tip is over 20%, it’s always a good idea to run another sale for tip only
Batch Out
Make sure that all refunds are processed on the same card used for the sale
Tab
Always open a tab for the exact or higher amount of an anticipating sale
Running a business is hard, but at Get Beyond, we’re here to make it just a little easier. Looking for more small business tips? Subscribe to our blog to never miss an update.
This article is provided for informational purposes only. Your business’s circumstances, goals, and objectives are unique to your business, so any information or opinions in this blog should not be construed as legal, tax, investment, financial, or other advice.  We urge you to always consult with a professional advisor before making important business decisions.
