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Chargebacks are when a cardholder reaches out to their bank to have a transaction be forcibly refunded from the merchant. Chargebacks or disputes are one of the least fun tasks that need to be handled when running a business. Depending on the way you sell your goods and services, you can take steps to be sure that your business has put policies and protection in place to reduce everything from friendly fraud, merchant error, and criminal fraud.

In Person Transactions

When accepting payments face to face here are a few steps you and your team can implement to protect against chargebacks.  

  • The EMV or “chip” cards became the new standard format in October 2015.  Since this time merchants are required to own hardware that can process in-person transactions using this encrypted technology.  If the merchant does not upgrade, they are responsible for liability with any cards that are using the magstripe technology on the cards. Be sure your POS, terminal or any other in person payment hardware is able to process EMV and chip cards.

  • Post return policies near the checkout, or have customer sign receipts or invoices with this policy printed on it.

  • Collect a signature whenever possible.

  • Setup your hardware to process PIN and chip or PIN debit transactions.

  • Request a driver’s license or ID to compare to the name on the credit card.

Phone Order Transactions

There are many scenarios where custom orders require the ability to process transactions over the phone.  Some customers prefer to speak to a person rather than provide their credit card information online. In any scenario, you can prepare to accept transactions with a few additional pieces of information to ensure your business stays protected against chargebacks.

  • When collecting card information, also ask for the billing address of the card. You can request this information to perform an address verification.  With a positive address match, you have additional proof during a dispute that this card was provided by the cardholder.

  • Request the 3 or 4 digit CVC or CVV code when you process the payment. A match on this is again additional proof that you worked with the cardholder to authorize the payment.

  • Collect a copy of an invoice with the customers signature.  This can be a game changer in disputes. This provides proof that the customer agreed to purchase itemized goods and services, plus you can include your return and shipping policy on these documents.

E-commerce Transactions

E-commerce transactions are transactions entered on a website to purchase a product or service from your shopping cart. In this circumstance, you are not interacting with the customer in-person. These scenarios can be higher risk, and it’s worth it to use additional tools to validate the buyer.

  • When collecting card information during checkout, you can require the billing address of the card be entered as well. You can request this information to perform an address verification.  With a positive address match, you have additional proof during a dispute that this card was provided by the cardholder

  • Require a match of the 3 or 4 digit CVC or CVV code when you process the payment.

  • Require acknowledgment of return and shipping policies before customers are able to checkout on your site.

Red Flags

Often times merchants will get a funny feeling when a purchase is being made. When larger than normal purchases are being made by new customers, who are requesting custom or rushed shipping, there can be something fraudulent going on.  Some merchants can put in place some internal protection for these scenarios. For example, orders over a certain dollar amount need additional customer verification procedures or are not eligible for expedited shipping.

Verifying your customer’s card information

If you’d like to verify a cardholder’s information with the bank before you authorize it, you can call in and provide the full card number, address and phone number.  Many gateways have this built in, but if you would prefer to talk to the bank, this gives you the ability to determine whether or not the card information is accurate with the banks records.

The Team on Your Team

We are here to help! If you receive a chargeback and would like help putting together a case to dispute this, feel free to give us a call.

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