Minimizing Chargebacks in 2014 - Being a Successful Merchant

As a merchant, you know how frustrating chargebacks can be for your business. They take time to dispute and cost your business real money. To start 2014’s series on being a successful merchant, we’re going to look at four simple steps to minimize charge backs.

Create a clear and concise returns and exchanges sections

The single best way to decrease chargebacks is to simply try and prevent them from happening. This might sound cliché, but laying out a clear and concise return and exchange policy helps prevent many of the most common miscommunication issues.
Being able to inform a customer of your 30 day return policy before they order prevents them from trying to return a widget on day 31 and being upset you will not take back the product.

Work With the Card Holder to Minimize Loss

Many times a customer will file a chargeback claim due to the product or service not being as described to them. These errors can come from the customer misunderstanding to merely a defective product. Customers will often take a replacement or discount to make them happy and end the transaction dispute. Credit Card companies also appreciate merchant’s attempts to resolve disputes between the two parties.

Ensure You Keep Records of Transactions

This one is simple, but as a merchant, you are required to keep records of purchase and signatures for card present transactions. This will help you prove there was an authorized use (AU) of the credit card. Without this, the customer can dispute to his credit card company that he never authorized the transaction.

Be Aware of Fraudulent Purchases

Card Not Present (CNP) transactions are particularly vulnerable to fraudulent purchases. Be aware of any customers who behave or act in suspicious manners such as purchasing several big ticket items in one transaction. People with stolen credit cards often try to spend as much as they can in a short amount of time before the card is cut off. Merchants concerned about possible fraudulent purchases should call in a Code 10 Authorization Request .

Accepting Credit Cards

As many businesses in today's fast paced environment are learning, accepting credit cards is a must for day to day business.  Due to the conveniences that credit cards provide, they have become the most common method of payment. Those businesses which remain cash-only and do not accept credit cards find themselves in a tough spot since consumers are likely to go elsewhere.  Increasing sales means accepting plastic!

Merchant Accounts

In order to accept credit cards as a form of payment, you will need a merchant account.  Without a merchant account, your credit card terminal won't do anything other than look good.  There are a number of merchant account services available and you should do your research before making your final decision.  Don't worry though, we'll give you more information on what to look for when choosing the right merchant services.

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What a merchant account does

A merchant account processes a credit card sale in conjunction with your credit card payment terminal.  Once your customer's credit card is swiped through the payment terminal, their account is checked and verified for the appropriate funds.  If approved, the funds are then transferred to your business account.  Essentially, a merchant account is the middle man or bridge transferring money from one account to the other.  Of course this is a very basic description of a merchant account and what a merchant account does.

Choosing the right merchant account

When attempting to choose the right merchant account, you should be very clear on what your business' needs are.  How many transactions will you have per month?  What will the average amount be per transaction?  How many locations will you operate from?  These questions are very important for the following reasons...

1. Transaction rates: percentage of sale + transaction fee
2. Monthly fee: flat rate or percentage
3. Minimum monthly transactions

Another thing to look for is whether or not you can provide your own credit card payment terminal.  Many merchants will charge you a monthly fee for using (renting) their payment terminal, whereas purchasing one for a onetime fee would be much more cost effective.  Of course you want to be sure you purchase your payment terminal from a trusted company such as SaleTerminal.com.  

Final Note

Accepting credit cards is a must in today's business world.  However, planning for and choosing the right merchant account shouldn't be a split second decision.  Be sure to learn your business' needs and choose a cost effective plan.  If possible, save money by purchasing a credit card payment terminal outright rather than renting one from your merchant services.