merchantaccountinfo's Journal: Merchant Account Chargebacks - Reasons and Solutions

When the issuing bank or the customer disputes a transaction, normally a credit card, a chargeback occurs against a merchant account. This enables the paying party to ask for removal of payment from the account and return in the form of refunds. This type of transaction is facilitated by merchant services wherein the funds are credited to the customer and the seller is informed of the incident. A business owner or a seller finds chargeback to be inconvenient as it means lost sales besides affecting the goodwill of the business.

Chargebacks can occur due to a number of reasons but a business owner can set up good policies and better business practices to avoid customers from making changes in their transactions that has negative effect. A business will be able to build a loyal customer base and have a strong business if it understands why chargeback occurs during and after processing of the payments. Following are some of the common reasons of merchant account chargeback and solution to prevent them.

An unreliable payment processing system

It is necessary to have a back up system for everything from the software you use to the credit card machines in order to protect fraud or erroneous entries. A processing system should facilitate safe transaction from the receipt and recording of payment at credit card terminals till it reaches to your bank account.

Install a system that provide multi-layered encryption and anti-fraud features that processes all kinds of verification and authorization procedures. It is better to use a payment processing system which prints the business name, service/product description, address, amount and other necessary information on invoices, receipts and delivery documents. This will bring down the incidents of customers denying or failing to recognize a genuine transaction.

Fraudulent chargebacks

A fraudulent chargeback means an act in which a customer tries to obtain a refund for no genuine reason. The main aim is to defraud the seller and get the service or product for free.

Hence it is important to protect your business from such frauds by setting your chargeback policy. You should have a good policy which offers better customer service while protecting your business at the same time. Display the chargeback policy on the checkout page of the website. This will help you to deal with unscrupulous customers competently.

Unsatisfied customers

Customer dissatisfaction is another reason for merchant account chargeback. If a customer finds the product or service unsatisfactory, he can ask for a refund. The complaint may be invalid or valid but the result is inconvenience to the business owner.

It is possible to avoid this kind of complaints by making clear all the things related to the products or services like description of the product or service, function, schedule, extent of service, expiration etc. An elaborated plan will help to avoid any kind of chargeback dispute. This will also avoid customer grudge and misunderstandings.

Inadequate support from the merchant service provider

In order to ensure the success of your business and security of your finances, it is important to have the support of a reputed merchant service provider. Choose a provider who extends full support, reasonable fees, good customer service, and chargeback policies which provides much-needed coverage for the business. Some providers may also provide chargeback reserves which ensure better protection to your business. It is recommended to go through the terms and conditions of the provider and clarify the queries. A reputed merchant account service provider will definitely work to help you out to resolve your issues.