How Can I Reduce the Number of My Chargebacks?
February 11, 2009
In the beginning stages of an e-commerce business, everything seems to be simple. As you begin to realize that you’re handling complex financial transactions in a virtual environment, you start to become worried about whether or not you can trust the information that you’re receiving. Are you getting legitimate charges or is someone trying to get something for nothing? Add to this worry the problem of chargebacks and it’s enough to make you want to quit everything. But that’s not necessary when you understand that you are the one that’s in control of the situation.
First of all, chargebacks can occur for a number of reasons – fraud, doubled transactions, unauthorized use of a credit card, etc. While some of these situations seem like innocent mistakes, the truth is that even the smallest mistakes will take time and effort from the merchant account provider that you use to handle the disputes. And their efforts add up to charges for your business – charges that you can avoid.
Chargebacks can be controlled in a number of ways. The most obvious way to control these issues is to make sure that the person that is paying you for a service is actually that person. When you’re in a virtual e-commerce environment, this can seem like a tricky thing to do. However, all it takes is making sure that you’re getting identifying information that will assure you of the buyer.
• Name
• Address
• Phone number
• Email address
• Credit card number
• Expiration date
• Verification number on credit card
• Exact name that’s on the credit card
Once you’ve gathered this information, you can be assured that the person is actually holding the card in their hands – though it could still be someone that doesn’t actually have authorization to use the card, but the chances are diminished.
Aside from that, you can also use services such as Verisign and preCharge to check the validity of your transactions. These services will check the information as the customer is entering it into the payment process. Without the knowledge of the customer, the information is given to various checking services that then accept or reject the information. This allows fraudulent transactions to be rejected BEFORE they go to the merchant account.
Why do you need services like this when you could just check the customer’s information? Identity theft is becoming rampant in the world these days. Thieves are smarter and know what information they will need to have in order to gain access to a credit card account. There are some thieves that will be deterred by more information gathering, but then there are others that will circumvent the process. Or at least, they will try. With services like preCharge and Verisign, the merchant is able to check the validity of a transaction in a more precise manner, allowing you to catch more crooks and prevent chargebacks.
Chargebacks are a pain for you and for your merchant provider – why not look into lightening both of your loads? In the end, everyone will win.
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