Accepting credit card payments is something that almost any modern business needs to be able to do, whether you have a storefront or only do business online. Merchant banks like SolidTrustPay allow small businesses and home-based businesses the opportunity to offer their customers the convenience of credit card payments for their goods and services. However, there are some risks associated with accepting credit cards for payment. One of the most daunting is the possibility of a chargeback that leads to your company paying fees to the bank.
What is a chargeback? It’s what happens when a consumer decides to contest a charge to their credit card. A charge can be contested for a number of reasons:
Credit Card Fraud: If a person has their credit card information stolen and used to make unauthorized purchases, the credit card issuer will immediately freeze the account and attempt to refund them for any charges.
Returns: These could happen if a person isn’t happy with their purchase or received an item that was different than what they ordered. If a customer makes a return but the credit isn’t immediately applied to their account by the store, the merchant bank could levy a chargeback fee.
Technical Issues: Problems with the credit card transaction (point-of-sale card readers, eCommerce site errors) sometimes lead to a customer being charged twice for a single sale. In this case, one of the sales is voided and a chargeback fee occurs.
Whatever reason for the chargeback, it usually winds up coming out of the pocket of the business. Chargeback fees can go up to $100 depending on the reason and the size of the initial charge. Even if the charge is discovered to be valid and the customer isn’t refunded, the business might still have to pay a chargeback fee to their merchant bank.
What can you do to stop potentially expensive chargebacks? One way is to open your merchant account with a provider such as Solid Trust Pay, which offers premium fraud loss and chargeback protection. On top of this, it’s important to have security measures in place to prevent the use of stolen credit cards and stop fraudulent purchases from occurring in the first place.
