Thursday, March 29, 2007
Almost everywhere an online seller goes the buzz about the evil called "chargeback" never ceases. It is indeed, one of the most troubling aspects of being a high risk merchant. Caveats from the merchant account experts have come and gone, but there's no denying that chargeback is synonymous to spam: you can avoid it, but you can never run away from it.
WHAT CAUSES A CHARGEBACK?
So what exactly causes a chargeback? All merchants have unique stories about clients either committing fraud, disputing the product shipped to them, or complaining they never received the product or it was shipped to the wrong person. It all boils down to one thing: a chargeback is like an avalanche -- unless you foresee it coming, it just snowballs and takes away your dinero, including possibly, your reputation as an honest online seller.
This is the reason why so many high risk merchants have difficulty finding a reliable merchant account provider. There's no hard and fast rule; it's like groping in the dark. However, the merchant can always contest a chargeback, how enlightening can that be! A processing error, for instance, may be committed by the bank, the card issuing company, or the card holder himself. If you're a merchant, you should take advantage of this. The trick is that when a chargeback occurs, make sure you send all your proofs of credit submission including the date they've been submitted as soon as possible so that the bank may re-present the product to the issuer.
YOUR MERCHANT CHECKLIST
But prevention is always a zillion times better than cure, and less expensive. If you don't want to be faced with an avalanche of chargebacks (high risk merchant businesses are so prone to this), your motto should be to check, check, check. Below I've listed a few key things you need to keep an eye on:
*Card number and signature for both the card and the receipt
*Suspicious looking alterations
*Authorization and proofs of delivery drafts
*Delivery point of the goods (offshore purchases are suspicious)
*Purchasing behavior (pattern)
It is imperative to never deliver the goods to your customer until all verifications have been made: from the billing address to the cardholder's identity itself. Mistakes of this kind can only be made by careless merchants who are only too happy to get customers without regard for possibilities of fraud.CHARGEBACK QUICK FIXES
As easy all these preventive measures sound, it can't be a perfect world. When chargebacks come by the dozen and you can't take the next step till you cleared up the mess, you need to sort out a few remedies before you move on. No merchant wants to lose a sale.
A good recourse is to ask for recommendations on high risk merchant services that don't have to be expensive but have good reputation. You can do that by joining merchant organizations or online business forums. Also, since your transactions are done online, find a way for you to become eligible for the Seller Protection Policy (SPP). As part of your authorization and proofs of delivery checking, your buyer must be able to provide a Confirmed Delivery Address so you'll be entitled to this policy.
Consider yourself awfully lucky if you found a good high risk merchant account provider and you suffered few chargebacks in one year. Selling online is not a losing race -- it is just an honest-to-goodness race for the brave.