Everything You Need to Know About Chargebacks

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Post on 15-Feb-2017

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EVERYTHING YOU NEED TO KNOW ABOUT CHARGEBACKSA GUIDE FOR BUSINESSES

A credit card company withdraws the money for a transaction from a merchants account and deposits it in a consumers, following a dispute

Specifically, it is the reversal of a prior outbound transfer of funds from a consumersbank account,line of credit, or credit cardWHAT IS A CHARGEBACK?

7 CAUSES OF CHARGEBACKS

1. Fraudulent transactions: card used without the consent of the cardholder

2. Credit not processed: merchandise returned, but refund not issued

3. Goods not received: customer did not receive the item

4. Technical problems: issues between banks and merchants may lead to errors

5. Authorization not obtained: often a result of merchants forcing a transaction

6. Recurring transactions: subscriptions processed after a cardholder cancellation

7. Friendly fraud: dishonest buyers who reverse charges while keeping merchandise

NOT-SO-FRIENDLY FRAUD

86%Global Risk Technologies (GRT) recently found that approximately 86% of chargebacks are friendly-fraud, and many consumers bypass merchants to directly file complaints with card-issuing banks.Source: http://www.paymentscardsandmobile.com/86-of-fraud-in-chargebacks/

NOT-SO-FRIENDLY FRAUDMerchants are paying $100 billion in fraud losses due to unauthorized transactions, fees and interest associated with chargebacks - nearly ten times the cost incurred by banks.Source: http://hubpages.com/business/The-Impact-of-a-Chargeback-to-You-as-a-Merchant

COST TO MERCHANTSCOST TO BANKS

THE CHARGEBACK PROCESS

STEP 1:Cardholder files a complaint with the issuing bank

STEP 2:Issuing bank investigates the validity of the claim

STEP 3:Issuing bank provides a provisional credit and requests funds from the acquiring bank

STEP 4:Acquiring bank investigates and declines the chargeback or requests information from the merchant

STEP 5:Merchant provides needed documents, bank applies relevant rules. If the claim is false, the cardholder will be charged again for the sale

WORRIED ABOUT CHARGEBACKS?But dont worry!

Chargebacks CAN be avoided

HOW TO AVOID CHARGEBACKSThe Authorization Process

Obtain an authorization approval for every transaction

Avoid using voice authorizations

Reauthorize anything more than seven days old

HOW TO AVOID CHARGEBACKSSecurity Precautions

Verifycard security codes

Exercise extra caution when the shipping address is different from the billing address

Work with a secure PCI DSS certified payment processor

HOW TO AVOID CHARGEBACKSThe Refund Process

Require customers to agree to your refund policy

Process refunds in a timely manner

Have a no-questions-asked refund and cancellation policy

HOW TO AVOID CHARGEBACKSThe Authorization Process

Be reachable so customers can contact you with issues instead of initiating chargebacks

Email customers confirmations with the details of each transaction

Call, fax or email any large orsuspicious ordersto ensure the order is legit

Do the final check -> confirm the customers identity and get signatures on orders and receipts

Communication

for the last point i recommend to put it as below, Do the last check comfirm the customer identity and get signtures on orders nd reciepts

www.3Gdirectpay.comJumuia Place, Block #1 Lenana Road Nairobi, Kenya+353 1 8764849+44 20 35148393

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