A Quick Guide for Merchants
What Are Chargebacks?
Common Types of Chargebacks:
What Happens When a Chargeback is Filed?
Once a chargeback is filed, the cardholder’s bank (issuing bank) places a hold on the transaction amount. The customer is not obligated to pay the amount until and unless the chargeback is resolved in the merchant’s favor.
Why Are Chargebacks a Problem For Businesses?
How Can I Reduce the Risk of Chargebacks?
- If you’re suspicious of a sale, you can contact your acquiring bank’s authorization center to make a code 10 authorization request.
- Ensure that cards are dipped (in an EMV reader) or tapped (on a contactless reader), rather than swiped.
- Be familiar with the warning signs of online fraud, and utilize address verification service (AVS) and card verification value (CVV) checks. AVS verifies that the provided billing address matches the billing address on file with the bank, as mismatched billing addresses are a big red flag for fraud.
- There are various online fraud screening tools available that add an extra layer of protection. Reach out to the Fidelity team to learn more.
- If a card is declined, do not continue to attempt to process it.
- Always submit authorization requests before processing transactions.
- Be sure to batch out your authorized transactions on time. Once you’ve authorized a transaction, it should be captured within 7 days. If you do not capture the transaction within this time frame, you should process a new authorization.
- Avoid data entry errors. Be vigilant that you are entering the correct data and transaction amount. The transaction amount should match the receipt.
- If the transaction amount has changed since authorization, be sure to communicate this to the customer before capturing the charge.
- Provide transaction receipts to customers.
- Maintain organized transaction and shipping records.
- Ensure that your customer service team is easily accessible and well-qualified to respond to customer complaints promptly and efficiently.
- Provide clear terms and conditions and refund/return policies. Whenever possible, have the customer sign your policies.
To learn more about chargebacks, see our Protect Your Business From Chargebacks.