An Introduction to Your Credit Card Processing Service: The Dreaded Chargeback Fee
Accepting credit cards on your eCommerce site can be a fairly complex process. Of course, most of the complicated transactions take place in the security coding and communications algorithms provided by your credit card processing service provider. For the most part, all you see is the completed sale and the payment received. But every so often the dreaded chargeback occurs. Keep reading to find out more about chargebacks, what they are, and how to avoid them.
At its most basic, a chargeback is a return of funds to a consumer. This is different from a return or refund however. A chargeback is often forcibly initiated by the issuing bank. This process is initiated as a form of consumer protection. It may be initiated due to a discrepancy between advertised price and charged price. However, most chargebacks occur due to fraud.
When a consumer’s identity or credit information is stolen and used to make a purchase on your site you are liable to refund the purchase cost. If a cardholder suspects fraudulent activity they will contact their issuing bank. That bank will contact your credit card processing service. They will attempt to determine the validity of the claim.
If a chargeback is found to be valid the consumer is issued a full refund. What’s more is that you will most like be responsible to pay a chargeback fee. This can range anywhere from 1 to 100 dollars. Because chargebacks are typically enacted after the purchase has been finalized this also means that you will lose the sale, pay a fee, and lose the merchandise, time, and handling costs associated with shipping. As you can imagine these kinds of transactions are incredibly damaging to any companies bottom line.
What It Means
An excessive number of chargebacks associated with your business can hurt more than your operating budget. If your site incurs a large amount of chargebacks your credit card processing service may increase your rates and fees or may even terminate your account. Chargebacks can cause a wide range of problems for merchants, but there are steps you can take to minimize their occurrence.
How to Avoid Chargebacks
Providing excellent service and product can ensure that you avoid chargebacks due to faulty merchandise or shoddy service. Perhaps the best way to avoid chargebacks is to employ an industry leading credit card processing service. A good service provider will offer state of the art security measures to verify your customers identity and stop transactions that raise fraud flags. Matching billing addresses with IP geo-addresses, using the card security code on the back of credit cards, and other fraud scrubbing measures ensures your customers are who they say they are and reduces the probability of chargebacks.
We Can Help
Allied Wallet has years of experience and employs state of the art, award winning security measures to protect you from chargeback fees. Contact us today to set up a credit card processing service that protects you and your clients information.