A direct marketing company contacted us today with an all-too-common story. Its current merchant account provider was terminating processing because the company had chargebacks http://www.riandalaw.com/Documents/MerchantChargebackLiability.pdf that exceeded the card brands required ratios of keeping chargebacks under 1%.
Simply fighting a chargeback is not enough to keep chargebacks under control. Even if you win a chargeback, it still remains on your processing history and figures into calculating your chargeback ratios.
Most Customers Call the Bank Instead of You
No matter how good your customer service is, the sad fact is that most customers will call their bank to issue and initiate a chargeback rather than calling you and asking for a refund. In some high risk industries, more than 86% of customers will call the bank without ever contacting the merchant.
And let’s face it. Consumers are getting more educated about how easy it is to initiate a chargeback. They understand that in the majority of cases, the issuing bank will side with the consumer.
Sure, it’s not “fair” to you as the merchant. Yet, the customers and issuing banks are not concerned about you. That’s simply the way it is.
How Early Warning System Helps You
High volume, high risk merchants now can take advantage of an early warning system to keep chargebacks under control. The service can effectively reduce chargebacks by more than 50%. As a result, merchant accounts are protected and processing can continue.
Here’s how it works:
When a customer calls the issuing bank to dispute a transaction, you are notified. At that point, you can immediately issue a refund for the amount of the purchase. Once the refund is issued, the dispute is closed and there is no chargeback.
The consumer still wins because the money is refunded. And you are still out the cost of the goods or service you provided.
However, your merchant account processing is protected. Your chargebacks thresholds can remain under 1%.
Protect Your Business
Without a way to protect yourself from chargebacks, your merchant account is at risk. Without payment processing, your business cannot not survive.
There is no perfect system to protect you against chargebacks. But, the early warning system is a good tool to have in your arsenal to protect your vitally important merchant accounts.
For more information contact firstname.lastname@example.org