everything you need to know about chargebacks
TRANSCRIPT
EVERYTHING YOU NEED TO KNOW ABOUT CHARGEBACKSA GUIDE FOR BUSINESSES
➢ A credit card company withdraws the money for a transaction from a merchant‘s account and deposits it in a consumer’s, following a dispute
➢ Specifically, it is the reversal of a prior outbound transfer of funds from a consumer’s bank account, line of credit, or credit card
WHAT 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 FRAUD
Merchants 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 MERCHANTS
COST 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 don’t 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
Verify card 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 CHARGEBACKS
The 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 or suspicious orders to ensure the order is legit
Do the final check -> confirm the customer’s identity and get signatures on orders and receipts
Communication
www.3Gdirectpay.comJumuia Place, Block #1 Lenana Road Nairobi, Kenya+353 1 8764849+44 20 35148393
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