People love to shop with their credit cards. Many purchases are made possible by their use. This is generally a good thing for the global economy. Every 30 seconds, approximately $931,490 are generated from global e-commerce sales through desktop computers. Another $269,683 is generated through purchases using mobile technology. Most merchant account providers will tell you that there is a downside to all of this credit card use. Credit card fraud is a real problem. There was $16.21 billion worth of credit card fraud reported globally in 2014. Each year, credit card fraud costs the United States economy more than $8 billion.
If you sell products online, you may be looking for ways to protect yourself from chargebacks. Many merchant account providers recommend you take the following steps to protect your company from the pain and hassle of chargebacks.
- Use AVS services. When you take orders online, you need to use an Address Verification Service (AVS) to check the address. You can use the service to verify the address and zip code with the credit card issuer. If the person making the purchase cannot supply the correct address and/or zip code, do not process this purchase. This is one of the easiest ways you can check to make sure the person who is using a credit card is authorized to do so.
- Verify the customer is the card holder. Both Visa and MasterCard have services to make sure the person making a purchase is the person authorized to use that card. MasterCard has its SecureCode and Visa uses “Verified by Visa.” Both are appreciated by merchant account providers. These services can offer protection from some kinds of chargebacks.
- Use delivery services that require a signature. Sometimes people claim they never received products when they did. This is called “friendly fraud” or a “friendly chargeback.” While most credit cards will still go ahead and refund the money and it may not be worth it for you to fight it, if you have a signature, you have a much better chance of succeeding. If you are selling more expensive merchandise, this is an essential part of selling it online.
- Never process a sale without getting the credit card security code. If a potential customer cannot supply the security number on the back of the card, do not process the sale. This an absolute “must do” according to all merchant account providers. After the billing zip code, this is the most important piece of information that a credit card holder must be able to provide. If the person has the credit card in their hand, they have that number.
- Provide good customer service. If there is a problem with a charge, you should be notified. Contact the customer if they are complaining about a product they received from you that was not what they expected. You may be able to work something out with them. If a customer returns something, process that as soon as you can. If you are an easy company to work with, even if the customer did not like what they bought and they want to return, people appreciate having their concerns addressed swiftly and without having to go through a lot of hassle. Make sure you communicate with the customer all the details of all refunds you process.
- Make sure your name is clear on the statement. Your website has one name but you bill under another. Your customer opens their credit card statement and sees a charge from a company they have never heard of. What do they do? They call their credit card company and question the charge. That only makes sense. Merchant account providers can add a billing descriptor to the charges so that your customers recognize the purchases they made.
- Be easy to reach. Make sure your customers know how they can reach you if they have a problem. You want them to reach out to you before they reach out to their credit card company. One way to do this is for you to make sure your phone number is all over your website.
Some chargebacks cannot be prevented but some can. If you follow these steps, you can prevent at least a few.
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