Chargeback Defense Strategies

As annoying as they may be, chargebacks are something that many online business owners just have to deal with. They have simply become another common element of e-commerce. It may not be fair, but in many cases, customers can back their way out of a purchase and leave you stuck to bear the financial burden. Adding to the problem is the aspect of less scrupulous characters looking to commit fraud with someone else’s credit card. It can be a frustrating ordeal, but this article will provide some strategic tips to help you combat the dreaded chargeback.

Common Chargeback Claims

Most chargebacks originate from fraudulent transactions and customers who make the claim of never receiving the items they purchased or even making a purchase at all. Because many of the credit card policies today are designed in favor of the consumer, as the merchant, you are generally required to pay the costs of the merchandise along with a penalty fee for the chargeback. This may occur whether the claim is legitimate or not. Merchant account providers having varying fees on chargebacks, typically factoring in the percentage of total monthly sales as well as your history of incurring such claims. So what is an online merchant to do in this seemingly no-win situation? Fortunately, there are several proven methods for minimizing the frequency of these claims and dramatically reducing their overall impact on your bottom line.

Obtain Your Merchant Account from a Reputable Provider

Chargeback defense starts by selecting a reputable merchant account provider for your business needs. Sadly, a large number of companies have blemished the market by delivering less than stellar support and pouring salt into the wound with hefty penalties and astronomical fees. Therefore, when choosing your merchant account provider, it is imperative that you learn more about their policies in regard to chargebacks. Keep in mind that not all providers are the same but the more reputable ones will be willingly to help you resolve matters and only charge moderate fees.

Select a Dependable Payment Processing Solution

When choosing your payment processing solution, put strong emphasis on a service that provides efficient, state of the art security mechanisms. Though a solution equipped with SSL encryption would be a good start, you also need to have something in place that ensures the legitimacy of credit card purchases to protect your business from fraudulent transactions. AVS (address verification) and CCV (credit card verification) are two viable anti-fraud features that should be applied to authorize all purchases on your site.

Stay on Alert

The best way to fight chargebacks is to remain proactive and look for signs of suspicious activity. Keep an eye out for inconsistency in the usual ordering logic and customer behavior. If you start to suspect that something is not right, further investigate the matter to determine if fraudulent activity is occurring. Whether it is something fishy with a home address, email address, IP address or phone number, whenever in doubt, take the necessary actions to find out what is going on. Like most offensives, one of the most effective ways to deal with chargebacks is prevention.