If you’re an online merchant, you need to learn about making your customer happy – especially since you’re not there in person to do so. One of the best ways to guarantee this result is to offer customers a sense of security when they come to your website. They want to feel as though you are there watching out for them, rather than just feeling like you’re trying to get the most money from them – no matter how that happens.
In order to provide the best service to your customers, you will need to learn what chargebacks are. Chargebacks are when you as the merchant need to credit your customer’s credit card account. This is different from a return or refund in which the transaction was legitimate; a chargeback generally deals with transactions that were false in their action and need to be corrected.
There are a number of reasons why you can give chargebacks:
- Card holder does not authorize the transaction
- The account numbers for the transaction do not match
- A refund wasn’t processed as promised
- The transaction was processed more than one time
- The customer has not received the items in the purchase
- The credit card was expired
- The amount in the transaction was wrong
- The credit card was used fraudulently
- There was no signature on the back of the credit card
- The signatures of the card and the receipt do not match
- The charges on the account were not authorized by the cardholder
And there are other reasons for a chargeback as well. In the end, the merchant will generally get a call from the customer asking for the funds to be credited to their account and after an investigation, the funds can either be returned or not. The customer can file a dispute and the merchant can appeal if they think that the chargeback in unfounded. Sometimes, this appeal process can result in a need for a mediator to step in to resolve the issue.
When you’re an e-commerce business, your goal is to prevent chargebacks from even happening. Each time you receive a chargeback, your merchant account provider will charge you for the extra work that it will take to handle the problem – and those charges can start to add up.
To prevent chargebacks, you can do a number of things:
- Have a customer sign a credit receipt in person (but that’s not really reasonable for an online business)
- Include some sort of verification of the address and identity of the cardholder (places like VeriSign are good for this service)
- Use another service to check the authenticity of the credit card information before sending it to a merchant account (like preCharge).
- Use a clear name when you charge a customer. This will show up on their credit card statement and will not alarm them into thinking that it’s a fraudulent charge
- Balance the credit card charges that you get to prevent duplicate charges
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Understanding Chargebacks 
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