What is a chargeback?
A chargeback is a credit card processing transaction disputed by the cardholder or card issuer. There are many reasons for chargebacks, but the most common are returned merchandise, terminated services, disputes, errors, or fraud. Merchants must be able to provide proof that the disputed credit card transaction is valid and in accordance with Visa/MasterCard regulations or risk having their account debited for the disputed credit card processing amount..

What does a chargeback mean to me?
For your credit card processing business, a chargeback translates into extra processing time and cost, a narrower profit margin for the sale, and possibly a loss of revenue. It is important to carefully track and manage the credit card processing chargebacks that you receive, take steps to avoid future chargebacks, and know your representment rights. In addition, you should also take measures to recover losses from customers who are financially liable for transactions that were charged back to your business.

How do I avoid chargebacks?
To avoid chargebacks, act promptly if contacted directly by the cardholder to resolve a dispute. By working directly with the cardholder, you can avoid costly fees and credit card processing costs as well as promote goodwill with your customer. If the cardholder does not contact you, respond to inquiries from your merchant service provider with as much information as possible about the sales transaction in question.

Labels: chargebacks, credit card processing, merchant services provider