Have You Ever Experienced a Chargeback?

As a consumer have you ever needed to call your credit card company and dispute a line item charge on your bill? When you dispute the charge you are credited back the money for the charge and typically asked to complete a form letter and return it to the credit card company. Sound familiar? So what happens to the business that is the object of the dispute?

As a consumer have you ever needed to call your credit card company and dispute a line item charge on your bill? When you dispute the charge you are credited back the money for the charge and typically asked to complete a form letter and return it to the credit card company. Sound familiar? So what happens to the business that is the object of the dispute?
The credit you receive is withdrawn from the business owners’ account and then they are sent a form letter asking for information in regards to the disputed charge.
The information is reviewed and the outcome is decided.

Not so bad for a consumer, but what about you the business owner? Did you know?
To encourage compliance, banks may charge merchants a penalty for each chargeback received. Payment service providers, such as PayPal, have a similar policy. PayPal Merchant charges $20 for each chargeback (regardless if it’s your first one) plus it will retain the original transaction fee.
In addition, Visa and MasterCard may levy severe fines against banks that retain merchants with high chargeback frequency. Banks typically pass such fines directly to the merchant. Merchants whose ratios stray too far out of compliance may trigger card association fines of $100 or more per chargeback.

We received a phone call from a company that was processing credit cards through a national processor and had heard through one of our current clients that we take the time to work through concerns/issues with clients. Apparently, they had accepted a phone/internet order for a manufactured product on what turned out to be a stolen credit card. The cardholder immediately contacted their credit card company and had the line item removed from their credit card bill. So what happened next to the business – a tough road! The client had no idea the policies and procedures that needed to be in place and therefore was finding the road they were on to be quite costly from both a time and money perspective!

If you are unsure of the policies and procedures you need to have in place to protect your business from a chargeback please look into it today – it will be time well spent. Our TransAct team works with our clients to support this process and to resolve it quickly and efficiently.