How to Set a Chargeback Policy
Chargebacks are reversals of credit card transactions that occur when customers dispute charges, businesses enter incorrect credit card information, or when there is fraud. Businesses are responsible for these chargebacks, and proving to a card company that a transaction is valid can be difficult, according to a February 2011 "Wall Street Journal" article. Although these chargebacks are rare, even a small reversal can hurt a small business operating on a slim profit margin. This is why a business should develop a chargeback policy.
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Instructions
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Learn the chargeback rules from the credit card companies or online transaction processing companies. They usually have detailed guidelines on how to resolve chargebacks. An online processing company may handle the resolution process on your behalf.
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Establish a return-and-exchange policy and display it prominently near cash registers and on your e-commerce website. For example, you may allow exchanges and returns up to 10 days after a sale, and only if the customer brings in the item and the sales receipt. You may decide to prohibit returns or exchanges for sale items. A clear return-and-exchange policy should discourage a customer from filing a chargeback claim because it's simpler to return an item for a full refund or to exchange it for another product.
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Prepare a brief chargeback policy document and display it near cash registers and on your e-commerce website. State on this document that you don't tolerate credit card fraud of any type, including stolen credit cards or unauthorized use of another person's card, and that you will report any incidences to the appropriate authorities.
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Identify the steps that you will take to resolve chargeback claims in your chargeback policy document. These steps may include contacting the customer, discussing his concerns and coming to a mutually acceptable solution. If a resolution is not possible with a customer and the chargeback goes through, some businesses may deactivate that customer's online account and insist on cash payments for future transactions.
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Train your employees in quality-of-transaction processes, including accurate data entry and customer verification procedures. Online transaction processing company ccNetPay recommends several ways to improve processing quality, such as checking the validity of the card, and verifying large Internet orders by contacting the customer and requesting confirmation.
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