Chargebacks can be costly for your business, but some simple steps can help reduce chargeback fees. A chargeback occurs when a cardholder successfully disputes a transaction processed by your business and has it reversed on their VISA or MasterCard account.
The chargeback process
When a cardholder or card issuer has any reason for concern regarding a credit card, VISA debit or debit MasterCard transaction, a dispute can be raised to authenticate the transaction.
If the cardholder advises that they didn’t make the transaction, or didn’t receive the goods or services purchased, the cardholder sends a formal advice of dispute to their card issuer. The card issuer then notifies us of the chargeback request. If further information is required, we'll send you a letter requesting supporting documentation, such as sales vouchers and/or tax invoices to send to the cardholder for validation. If the information you provide doesn’t validate the sale and/or delivery, your business will be charged the disputed amount and the chargeback fee.
Common causes for chargebacks
- Requested transaction data not received.
- Requested/required item illegible or missing.
- Required authorisation not obtained.
- Transaction amount differs to purchase.
- Duplicate processing.
- Card not valid or expired.
- Cancelled recurring transaction.
- Late presentment of manual vouchers.
- Cardholder dispute – defective/not as described.
- Non-receipt of merchandise or services.
- Cardholder didn’t authorise the transaction – potential fraud.
Ways to avoid the chargeback
You can help to reduce chargebacks and protect your business from fraud with the following guidelines.
- Refunds - Process refunds back to the credit card the original purchase was made from.
- Delivery - Always deliver goods or services as advertised or promised.
- Confirmation - Obtain and store signed delivery confirmation that goods were collected/received by the true cardholder.
- Unusual transactions - Be wary of unusual or large purchase requests.
- Fraud management - Leverage fraud and transaction management tools available through payment gateways.
- Receipts - Use the business or company name most recognised by your customers on your transaction receipts.
- Disputes and refunds - Promptly resolve customer disputes and refunds.
- NAB requests - Provide transaction receipts when requested, without delay.
- Resubmitting transactions - Understand your rights to resubmit unprocessed transactions to avoid unnecessary chargebacks.
- Online protection - Use Verified by VISA or MasterCard SecureCode for eCommerce transactions for additional protection and to reduce risk.
- Educate - Ensure you and your staff watch the ‘Credit Card Fraud and Protection’ video on our website.
To find out how to register for electronic chargeback reporting, email firstname.lastname@example.org.
This article was originally published in Talking Shop August 2014