How To Handle Chargebacks as a Small Business

Chargebacks, or when a transaction is reversed, can happen to any business. These reversals may come with fines or fees which can damage your company. Whether you are doing commerce online or in person, there are ways to reduce and handle the number of chargebacks your business receives and keep your company in good standing with customers, banks and regulatory bodies.

Card Not Present Fraud

Card not present fraud is one of the leading causes for chargebacks in the world of ecommerce. These are usually someone using a stolen card number and can be difficult to avoid for small businesses doing sales online. Some ways to reduce the amount of CNP fraud that you deal with include having secure transaction software which uses the security code on the card, making sure your company name is displayed on the bank records for the transaction, and beefing up the security around your networks and data.

Card Present Fraud

Card present fraud happens when a thief is using a stolen physical card in your storefront or when a malicious actor protests charges from a legitimate purchase. You can avoid this type of fraud by having a policy to check picture identification for card purchases. When dealing with a large purchase or a product order, it is important to get a written contract for the sale. This can help you prove that it was legitimate in court. Sometimes this is also “friendly fraud” where the transaction was legitimate and the customer received the purchase, but still initiated a chargeback. You can get help from Ethoca chargeback solutions to investigate and recover losses from transaction fraud.

Legitimate Chargebacks

The regulations around chargebacks are in place to protect customers. This is not to say that good companies never get legitimate chargebacks because mistakes happen every day. Some examples of these mistakes include a charge showing up twice on a customer statement, a lost product or a miscommunication over details of a sale. To reduce the number of these it is a good idea to go over the details with a signed contract, train employees in how to operate the point-of-sale software and double check that the amount seems right to the customer before finalizing the transaction.

Chargebacks happen to almost every business, but you can take steps to reduce the number that you face. Whether the card is present or it is an ecommerce transaction, you can increase security around transactions and data with the right software, with checking IDs and with checking the details of a sale with your customers.


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