The Merchant Processing Guru Tip#13 continued: Credit card processing “Chargebacks” What are they and how to avoid them!
“Chargebacks” not only cost you the money you should have made from the sale but the processor has to charge you for the involvement they have in dealing with the issue, the processor will charge you anywhere from $15.00 to $35.00 as what is called a “chargeback fee”. Whether you win or lose the dispute then there is still that chargeback fee to cover the costs of the processor getting involved to handle this issue. So treat your customers right and you will avoid chargebacks!
You may also be charged what is called a “retrieval fee” of approx. $5.00 – $25.00 for the processor to “retrieve” the funds from your account that were disputed should you lose the dispute. It gets worse! Should you have excessive “chargebacks” of more than 1% of the transactions you process then according to Visa & MasterCard’s terms you are an unacceptable risk to them and their card members and will most likely be dropped by your credit card processor. A processor can also be penalized for having anyone on their books who has more than a 1% “chargeback” history and you will find it very hard for any processor to accept you as a merchant after being dropped for this reason. As you can see, you want to avoid this unpleasant occurrence at all costs, so always have proof and signature for every transaction. The good news is that “chargebacks” in most traditional industries are a rare occurrence, so as long as you stick to the guidelines of accepting credit cards you won’t have anything to worry about. If you have questions or concerns just get in touch with me and I will be happy to help.
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