There’s one main way that transaction funds can be stalled by the bank and it’s called a chargeback. Today we’re going to dive into the framework behind and how we as bike shop owners can prevent chargebacks.
My name is Nigel Groce-Wright, an avid downhill rider and a seasoned expert in financial technology with over a decade of experience, I’ve seen it all when it comes to payment processing and chargebacks. From founding successful startups to advising businesses, I’ve gathered invaluable insights that I’m eager to share with you to help resolve your payment processing issues.
Your friends at The Bike Collective are back to help us all save time and money in the form of payment processing delays. There’s one main way that transaction funds can be stalled by the bank and it’s called a chargeback. Today we’re going to dive into the framework behind and how we as shop owners can prevent chargebacks. Your friends at the Bike Collective are back to help us all save time and money in the form of payment processing delays.
What Is A Chargeback and How Do They Happen?
As merchants offering credit card processing, we are subject to disputes and failures in the background when the bank begins processing the transaction. The complex web of systems communicating between transaction initiation and transaction approval is vast, and without the right systems in place, missing details will lead to a chargeback.
This happens because the bank and credit card network flag the transaction as fraudulent. If the transaction is deemed fraud you’ll be issued a chargeback fee and the customer will be issued a refund. Chargebacks are a major way shop owners wind up paying more than they should for payment processing so let’s understand a bit more about the chargeback process.
What’s Involved During A Chargeback?
There are a few steps that happen leading up to a chargeback so we’re going to get a solid handle on where the errors occur. Often payment processing works on a real-time basis, so issuing the transaction during a sale sends the transaction directly to the bank before anybody can review it.
A chargeback is initiated by the card holder. The most often claim in a chargeback is a fraudulent or unrecognized purchase. Although advanced card thefts are everywhere, generally chargebacks only effect your bike shops on the bigger purchases. A criminal will often purchase a high value item or a lot of smaller value items that they can easily sell. A credit card thief will purchase a bike with a stolen credit card, take that bike to a booster who buys the bike, and sells it somewhere like eBay or Facebook. At the end of the day, the only party that loses in all this is you, the merchant.
What Errors Initiate A Chargeback?
There are a number of errors that will initiate a chargeback, which varies by bank, but some errors are standard. If the invoice amount is different than the transaction amount, or the card is damaged or stolen, or expired, or a credit sale is issued as a charge, these are all common occurrences that the bank will automatically flag as a chargeback.
This will cost you a chunk of the present sale in chargeback fees, even if you decide to dispute the transaction. The details of the chargeback will be sent to you as well as the bank’s reason codes which will list all of the triggers for a chargeback. Now we understand where chargebacks originate, let’s figure out how we are going to prevent these pesky chargebacks.
What Can I Do To Avoid Chargebacks?
The short answer to this common issue is tough to swallow but easier to hear from a friend, due diligence. You may recall a point of sale system prompting you to answer, credit or debit, and transaction amount approved, those steps alone will prevent a huge number of chargebacks to be put on your shoulders. With the customer confirming their information twice, you will not be responsible for the card being expired, or damaged, the total amount being incorrect, or a charge being issued as a credit.
When setting up your payment processor you want to consider the protections being offered to you for chargebacks. Whether you are using a checkout gateway or a terminal gateway these preventative measures will keep your profits from flying out of the door to chargeback fees. If your bike shop is experiencing chargebacks in-store or online, contact our preferred partner Process Payments Now.
At The Bike Collective we know how important your reputation is and payment errors can leave a stain on your record. With some simple steps to improve due diligence, you do not have to deal with nearly as many chargebacks as you might be experiencing. We are here to help you guys with all of these pain points and are happy to jump in and digest the complexity and recommend the tools suited for bike shops.
The best way to keep your business safe from chargebacks is to contact our friends at Process Payments Now.