by Trisha Echols
You are a start-up online merchant. You hired good programmers to come up with an excellent web design for your online store. Then you fill your online shop with quality, top-of-the-line, highly marketable products. The sales increase every week. Your financial ledger show you are doing fine. But when you check your merchant accounts, you discover a number of costly debits. Upon examination, you came to know that those debits result from chargebacks.
What is a chargeback? Basically, a chargeback occurs when a customer disputes a credit card transaction.
Too often, each chargeback carries a stiff penalty fee against the merchant. They take away significant portion of your profit. And if left to accumulate, these chargebacks will result to the termination of your merchant account.
Business experts and various financial advisers urge merchants to implement strategies to prevent chargebacks. Below are the sources of chargebacks ( including their respective Visa/Mastercard error codes) and how to deal with each of them.
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INCORRECT ACCOUNT NUMBER (36)
Usually occurs at processing terminals, particularly with the MOTO– Mail Order/ Telephone Order type of business. The merchant made a mistake in keying in the proper digits into the terminal.
To deal with this kind of chargeback: Initiate the transfer of the particular amount back to the customer’s account. Then make another receipt and contact the customer to discuss remedial measures agreeable to both parties.
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DUPLICATE PROCESSING (82)
The merchant charges the customer’s credit card twice for the same exact transaction.
To deal with this kind of chargeback: Issue a corresponding refund to the customer.
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CUSTOMER CLAIMS SERVICES NOT PERFORMED (30)
Let’s take up this one using a simple illustration. For example, you, as a merchant, promised to do some painting jobs for the customer’s house. You agreed on the contract price, the completion date, and billed the customer’s credit card. In this instance, the customer will claim that you never did any painting jobs for his house. Hence, the chargeback.
To deal with this kind of chargeback: Send copies of invoices or receipts to show proof that you indeed performed the aforementioned services.
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MERCHANDISE/SERVICE NOT AS DESCRIBED (53)
To illustrate this chargeback, let us suppose that , the customer shopped for green apples in your website. He expected that you would deliver him green apples. But as it turned out, he claimed you delivered him oranges. Hence, the chargeback.
To deal with this issue : You should show as proof your return policy and then insist that the customer should return the merchandise before making a refund.
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DEFECTIVE MERCHANDISE ( 56)
This one is very easy. Let’s imagine that a customer ordered some porcelain pots from your store. Upon delivery, she discovers that most of the pots have blatant cracks on them. So she initiates the chargebacks.
To deal with this chargeback: Same as above. Show your return policy and have the customer return the merchandise. Then issue the customer the necessary refund.
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CUSTOMER CLAIMS MERCHANDISE NOT RECEIVED (90)
Too often, this chargeback complaint comes from dishonest customers. Just provide the bank with the necessary receipt of deliveries.
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FRAUDENT CARD-NOT-PRESENT TRANSACTIONS ( 61)
To illustrate this one, let us suppose that a customer complains that you charge his credit card for two dozen pizza pies he did not order nor authorized. ( Of course, the fact remains that his family have already gobbled up those two dozen pizza pies!)
To deal with this one: Show authorization approval and proof of delivery receipts countersigned by the customer.
( Trisha Echols currently is a long-time financial consultant with established consultancy offices in Amsterdam, Halifax, Malaysia and other key cities. Her clients belong to the top 500 companies in England and in the United States. Miss Echols serves as business consultant for a number of credit card processing service providers, including wwww.creditcardprocessingexperts.com. She does lectures on strategic business practices and also writes for various magazines on business matters.)
