What are the best practices for handling chargebacks and disputes in Merchant Services?

1 Understand the chargeback process

A chargeback is a reversal of a credit card transaction initiated by the cardholder's bank or issuer. It can occur for various reasons, such as unauthorized or fraudulent charges, defective or undelivered goods or services, billing errors, or customer disputes. When a chargeback occurs, the merchant's bank or processor deducts the disputed amount from the merchant's account and notifies them of the chargeback. The merchant can then either accept the chargeback or contest it by providing evidence that the transaction was valid and authorized. The cardholder's bank or issuer will then review the evidence and decide whether to uphold or reverse the chargeback.

2 Follow the dispute resolution guidelines

Each card network (such as Visa, Mastercard, American Express, or Discover) has its own rules and procedures for handling chargebacks and disputes. These include the time frames, fees, documentation, and communication requirements for each stage of the process. As a merchant, you should familiarize yourself with these guidelines and follow them closely to avoid losing your rights or missing deadlines. You should also keep track of the status and outcome of each chargeback and dispute and update your records accordingly.

3 Provide excellent customer service

One of the best ways to prevent and reduce chargebacks and disputes is to provide excellent customer service to your customers. This means being clear and accurate about your products, services, prices, policies, and terms and conditions. It also means being responsive and courteous to your customers' inquiries, complaints, feedback, and requests. By doing so, you can build trust and loyalty with your customers and resolve any issues before they escalate to a chargeback or dispute. You can also encourage your customers to contact you directly rather than their card issuer if they have any problems or concerns with their transactions.

4 Use fraud prevention tools and best practices

Another key factor in minimizing chargebacks and disputes is to protect your business from fraud. Fraudsters can use stolen or counterfeit cards, identity theft, phishing, or malware to make fraudulent transactions that result in chargebacks. To prevent this, you should use fraud prevention tools and best practices, such as verifying the cardholder's identity and address, using secure payment gateways and encryption, requesting the card verification value (CVV) and the cardholder verification method (CVM), and monitoring your transactions for any suspicious or unusual activity.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?