Easy Steps to Reduce Chargebacks
When you accept credit cards the dreaded chargeback can become a serious concern for many businesses. Enjoying the benefits of accepting credit cards does carry some liability and risk not only for the business owner but the credit card processor. This risk leads to higher credit card processing rates, chargeback fees, and more strict underwriting guidelines for merchant accounts to accept credit cards. For our regular readers I have already gone into detail about what a chargeback is and consequences that could result from improper documentation. So what can you do to reduce your liability and the number of chargebacks that your business encounters before it happens?
The first step to avoiding a chargeback is by properly training your staff on some simple tips to verify the card holder’s identity. Pretend a customer is standing in front of you with their purchase which of course makes you smile but when they hand you that credit card to pay for it …. How do you know that they are authorized to use that card? Train your staff on the following 4 easy steps to help save your business from a chargeback and the money, headaches, and resulting paperwork.
Step 1 to Reducing Chargeback Likelyhood
When the customer hands their credit card over for payment, swipe it for an authorization, and while you are waiting for a confirmation inspect the card to make sure that it has not been tampered with or a counterfeit. Examine the account number and make sure that the numbers are of uniform size, aligned perfectly, and spaced properly. Make sure that any security features have not been altered. For instance holograms scraped off or pictures of the cardholder defaced. If you would like a detailed description of how to inspect a credit card you can visit the Visa or MasterCard websites for comprehensive details.
Step 2 to Preventing Credit Card Fraud:
When the authorization or receipt to be signed comes up make sure that the last four digits of the card match those on the credit card itself. Many black market credit cards that are manufactured from stolen credit card information will not match. If possible simply call the voice authorization number provided by your merchant services provider and ask for a Code 10 Authorization. They will walk you through the appropriate steps from that point forward.
Step 3 to Cutting Chargeback Losses:
If the customer did not use a PIN based debit card hold onto the card while the customer signs the receipt. This is an important step because you should compare the signature on the credit card with that of the one that the customer signed on your receipt or touch screen terminal. If the signature does not match exactly that is acceptable as long as the first initial and spelling of their last name do match. If the signature is not legible you can always politely ask the cardholders name. If the response or the signature does not match then place a call to your processor and note the discrepancy after the customer has left. This may not prevent a fraudulent purchase at the time but may save the owner of the credit card from having more in the future while simultaneously not insulting your customer.
The Fourth Step to Accept Credit Cards:
Do not allow any unsigned card to be used. The card issuing networks consider any unsigned card to be invalid. If your customer gives you an unsigned card simply request an official ID (drivers license/passport etc…) and ask the card holder to sign their card. If the customer refuses to sign their card then ask for a different form of payment. Make sure that the signatures are a match. If the customer’s card says ASK FOR ID on the back it is still considered invalid. In this case inform the customer that they should request a new card and sign it. When they give your their ID make sure that the signature on the ID provided is a match with that on the receipt.
If the signatures do not match then simply call the voice authorization number provided by your merchant services provider and ask for a code 10 authorization.
Your business should make preventing chargeback fines and credit card fraud a priority not only for your bottom line but to protect your customers. Taking these easy steps will only take a few seconds but go a long way to reducing your businesses liability while making your customers comforted with your concern.
If you would like more information or simply to reduce the cost of your credit card processing then contact The Merchant Doctor we have credit card processing solutions for every type of business whether you need to accept credit cards online, on your phone, or in your storefront.