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How do I reduce chargebacks?

This article provides tips to help you reduce the likelihood of having a sale charged back to you. 


Being EMV (Europay MasterCard Visa) compliant is the best protection against chargebacks.  EMV chip cards contain microprocessors which provide stronger transaction security features and other application capabilities.  Unlike magnetic stripe cards, the card chip creates a unique transaction code everytime it is used for payment. This transaction code can only be used once. When a chip card is used, the card's authenticity is verified when data is transferred between the chip and the issuing bank, which creates unique transaction data. Magnetic stripe cards contain unchanging data. When they are swiped, the payment processor matches them to the linked bank account by reading magnetic fields. This makes it easier for fraudsters to copy the information and create counterfeit cards. Please see the attachment below and Article INF23795 for more information on EMV.

Detailed information

Top Ten Ways to Reduce Chargebacks

Chargebacks happen for a variety of reasons.  They can cost you a lot of time, money, and even your processing account.  Here are a few simple tips to help you reduce chargebacks:


  1. Be clear about refund and return policies.  Make sure that the conditions of the sale are written on the receipt near the customer’s signature and that (s)he receives a copy of that receipt.  Also display your refund and return policy near the register, in a place all your customers can see it.  It doesn't hurt to have cashiers explain your policy to customers at the time of the sale.


  1. Respond to retrieval request and chargeback letters as soon as possible.  If you wish to dispute a customer's claim, all documents we request to resolve the issue should be sent by the date specified in the letter.  Even if the customer is wrong, your failure to reply usually makes you liable for the funds.


  1. Collect CVC2 and CVV2 verification numbers.  According to Visa this can reduce chargebacks and reduce any pass-through fees that may be charged when a credit card order is conducted.  On the back of MasterCard, most Visa and Discover credit cards is a 3-digit security code located right after the credit card number.  American Express cards have a 4-digit security code located on the front of the card just above the cardholder's account number.  Most online payment processors support entering security codes when processing credit card orders.  This extra security measure helps protect you against fraud.


  1. Use Address Verification System (AVS).  AVS checks to make sure that the address entered on an order form is the same as the address to which the cardholder's billing statements are mailed.  People using stolen card numbers usually don't enter the real cardholder's billing address on an order form.  Be cautious of orders with non-matching billing and shipping addresses.  AVS only works with US addresses.


  1. Let customers know what name will appear on statements.  Letting customers know the name that will appear on their credit card statement will avoid a lot of confusion.


  1. Watch out for orders using free e-mail addresses.  Be wary of accepting orders from people who are using a free email address when ordering (i.e. Hotmail, Yahoo, etc.).  People using free email are almost impossible to track so most fraudulent orders are made using free email addresses. 


  1. Take an imprint of the credit card.  In instances when a card's magnetic stripe is unreadable or for delivery orders, making an imprint of the card is proof that the card was present and should be kept with your records of the transaction.


  1. Collect signatures upon deliveryYou can use carriers that require signatures for delivery and supply you with a copy.  Always retain these in your records.


  1. Request a copy of identification and credit cardAlways see identification for face-to-face transactions. 


  1. Be cautious of orders from foreign countries.  A large majority of fraudulent orders come from places like the Middle East, Asia, Africa and South America.  Watch out for foreign customers who place orders for large amounts, or for several of the same expensive item, and/or insist on next-day shipping.
KB ID# INF20355
10/18/2017 3:56:25 AM
QYPPRDQBKSWS08 9142 Pro 2018 042586