The Merchant Processing Guru Tip#13: Credit card processing “Chargebacks” What are they and how to avoid them!
A “chargeback” is where a card holder calls up their credit card company to dispute a charge on their card. This will start the process where you as the merchant who placed this charge will have to prove that it was a legitimate transaction. Should you have a signed credit card receipt then you are probably home free but should you not have this very important little bit of information then you have a battle on your hands that you are not very likely to win.
Visa & MasterCard are most interested in protecting their card holders more than the merchants who process the transactions and they will always side on the card holders side whenever possible. Only when you can prove beyond a doubt that a transaction was legitimately made by the card holder will you prevail.
ALWAYS HAVE PROOF OF THE SALE AND THAT THE PERSON WHO’S CARD YOUR PROCESSED MADE THE ORDER! If you are meeting your client in person and not swiping the card on a terminal but entering the card information manually then always get an imprint of the card with an old fashioned manual imprinter, affectionately known as a “Knuckle buster”, with their signature on the slip and filled out completely. If you do not see them in person and you get their credit card information given to you in some other way then this is the riskiest type of transaction and to make it a whole lot safer, you will want to make sure you have something signed by the client, which you can email them and have them sign and fax or scan & email it back to you. This will help eliminate the risk of a “chargeback”. If you don’t have a form to send or aren’t sure how to draft one, I can provide you with a form to send your clients, every time they want to use a credit card, that will cover you in case of a dispute.
If you can’t or don’t want to do this part then the next best thing would be to have an email or some sort of order with the person’s name and as much information about them as possible. Again, this can be risky and the higher the amount of the sale the more you stand to lose if the client disputes the transaction. It is always better to take the extra precautions to cover yourself from a potential, costly dispute. To be continued in my next post.