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COVER STORY
30 Reduce Credit Card Chargebacks
Nobody wants to pay penalty fees, but a surfeit of charge-
backs can ultimately result in the merchant losing their ability to accept credit card payments from one or more companies. Losing the ability to do business with American Express cardholders may be an embarrassment, as well as a potentially signifi cant loss of revenue; lose Amex and Visa or Master- Card, and you may as well close up shop. With the increase in ecommerce, along with factors such as debit and check cards replacing many ATM cards, the number of chargebacks is expected to increase. However, as in most cases, such penal- ties can be avoided, usually with relative ease.
Great sales numbers do not count for much
if a substantial number of those sales wind up being invalidated.
Care Counts.
A busy store is usually a happy store. However, posting great sales numbers does not count for much if a substantial number of those sales wind up being invalidated. Common reasons for chargebacks include charging a customer more than once for the same item or service, posting a charge to the wrong person’s account, overcharging the customer, and failing to properly scrutinize the customer’s card. Avoiding all of the above can be time consuming, especially in a brick and mortar situation where lines may grow long and customers get impatient. However, anything worth doing at all is worth doing well, to paraphrase the Earl of Chesterfi eld (who of course never had to deal with Discover Cards). It may sound like Credit Card 101, but always examine
the customer’s card, even a long-standing one who’s known to you. Look at the expiration date and the signature panel to ensure validity. If there is no signature, you should ask the customer to sign the card in your presence, and you may want to ask for additional I.D. to compare signatures. In addition, utilizing the three digit (MasterCard, Visa, Discover) and four digit (Amex) codes may be a good idea. T ese numbers,
known as card verifi cation numbers, or CVNs, appear aſt er the credit card account number on the back of the card (newer MasterCard and Visa cards display the numbers in a separate panel to the right of the signature strip, to avoid overwriting the CVN when signing), or in the case of Amex, on the front of the card above the account number. Requesting this type of information is becoming more common with online and phone orders, as it virtually guarantees that the customer is in physical possession of the card, thus cut ing down on fraud chargebacks. Visa has reported that this particular tactic can reduce chargebacks by as much as 30 percent. Multiple ring-ups of the same item and overcharging
for an item are problems that may never go away entirely, but again, taking care when ringing up an order can vastly reduce such instances.
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32
April 2010
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