Chargebacks

Chargebacks are an unfortunate fact of life for card-not-present merchants, occurring when a customer disputes a charge on a card.  The customer contacts his/her card issuer and initiates the process through the merchant's payment processor.  Your processor will charge you a fee for each chargeback you receive.   You have the right to fight the dispute in a process called representment, where you must substantiate the charge by providing verification of sale, if you cannot substantiate the sale you will have to reimburse the customer. 

The 3 most common reasons for chargebacks are: 

• Unauthorized Use- customers claim their cards were used without their knowledge or permission.  Asking the customer for additional information at the time of purchase can greatly reduce this form of chargeback.
• Authorization Not Obtained- when the card issuers believe that a valid authorization was not obtained for a deposit.  This type of chargeback occurs when multiple partial deposits are made against single authorizations. 
• Recurring Transactions- chargebacks occur when a consumer believes they have been billed after cancelling a subscription, membership, or multi-payment billing series. Using clear and explicit billing descriptors will help you avoid these types of chargebacks. 

For more detailed information on how to avoid chargebacks download our eBook.