Merchant Services for ISO: Understanding Credit Chargebacks

Chargebacks should be a concern when your business uses services for ISO credit transaction processing. It involves a customer’s account is credited due to merchant error or a consumer complaint. Too many can cause your business to lose the merchant account. You can do things on your end to reduce the number of instances; however, remember that a chargeback can arise without it being your fault. These unavoidable complications limit the amount of precautions your staff can take when accepting credit payments. Unauthorized credit use, a missing signature, processing errors, an expired card, or a customer dispute are all common causes. You can do a few things to reduce both procedural and consumer initiated disputes. Merchant services for ISO can be more beneficial when you are able to prevent these types of occurrences.

Reducing the Number of Disputes Submitted to Your Merchant Services Company

A merchant services company must appropriately handle a dispute when it is filed. Procedural chargebacks are the easiest to avoid because they are caused by going against the set rules of the bank. They include the first four examples mentioned above as well as others. Reduce merchant errors by creating a set of routine procedures for your staff. They should follow these procedures for every received payment. A good example would include these steps:

  • Physically receive the customer’s card.
  • Verify the expiration date.
  • Run the card.
  • Match the cards signature with the signed receipt.

Unauthorized transactions, expired cards, and no signature are very common reasons for returning funds. Discuss the importance of checking this card information with current and future staff members. Expired cards must not be run regardless of the circumstances. The employee should be instructed to request another payment type. If the card is ran and rejected, a good procedure would be to either contact the issuer or simply ask if they can pay with something different. Unsigned cards should never be accepted unless the customer can provide another form of identification. A driver’s license is a good way to verify a signature. It is good practice to not accept a transaction unless the person signing is the cardholder. Avoid letting spouses or children sign the card.

Sometimes the customer will file a dispute with the merchant services company. A customer may dispute the payment because of damaged goods or excessive charges. Chargebacks directly involve the credit issuer which makes them far more complicated than a simple product return. Customers complain to them directly which prevents resolution with the consumer. You can put a stop to some of these occurrences by having a more lenient policy for returns. Of course the benefits of this reduction will have to be compared to the cost of return policy abuse. Have consistent and adequate documentation for each transaction. Sufficient documents are the only way to fight a consumer chargeback. Good documentation to have available when using merchant services for ISO is a signed receipt, shipment documents, and stored transaction records through the service provider. All can be beneficial when you want to limit the amount of chargebacks your business experiences.