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How to Avoid Chargebacks

Chargebacks are abhorred by many business owners because the responsibility of dealing with the chargebacks falls on their shoulders. For many credit card processing firms, chargebacks are the responsibility of the companies and merchant account holders. This means the account holder has to deal with the fees when there is a chargeback. The most effective way to avoid chargebacks is to have efficient bookkeeping systems and conduct business in a professional manner. Here are tips on how to avoid chargebacks.

• Be on the lookout for charges originating from a location with the same billing address but with a different shipping address. While some business owners have set up shops in different locations, which necessitates different addresses, this is often a sign of fraud. Be extra careful with two addresses in different countries.

• Compare the details of the cardholder in the card with that of a valid ID. The details to compare include the signature and names of the cardholder. Double-checking these details is a simple way of checking against fraudulent cardholders.

• Businesses that conduct most of their transactions on the Internet should maintain a strict authorization process. However, it is important for businesses to ensure that they inform cardholders of all the costs involved with the security process before the cardholders authorize transactions.

• Reject all credit cards that have been declined or expired. Some cardholders may have an explanation for an expired or declined card. However, it is wise not to accept the explanation because separating genuine customers from swindlers is not easy. Rejected and declined credit cards are likely to attract a chargeback. Sellers have a right to insist on valid cards.

• Business owners should authorize all their business transactions electronically and safely keep all the records associated with the transactions. Solid records help businesses verify sales, which does not just help business owners avoid chargebacks but it also gives them viable records for addressing chargebacks that may arise.

• Ensure the merchant bank gets clear information about your business when addressing chargeback issues. Business owners who establish proper records can avoid confusion and other problems by ensuring their merchant banks receive all copies of business transactions in time. The sooner the banks get the information, the better.

• A good practice in avoiding chargebacks is to ship goods before charging cardholders. Some business owners charge first and ship later. This creates a chargeback in case problems with getting the goods out arise. Business owners should set up their systems to charge credit cards once goods have been sent, not before. This will help them avoid chargebacks.

• If a customer requests a refund or replacement, do so promptly. Even the most vaunted systems sometimes create faulty goods. The faster a business handles a refund or replacement request, the better the chance of avoiding chargebacks.

• Do not label refunds as a sale. Make a clear distinction between sales and other forms of transactions to avoid chargebacks.

It is important for business owners to sign up for a chargeback monitoring system or address verification program. These systems are offered by some credit card processing firms to their partners as a means of checking against chargebacks.

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