As a business owner, it is imperative that you take the proper steps to protect yourself from unnecessary and unwanted chargeback’s. With that said, there is no doubt that consumers tend to have the upper hand when it comes to disputes based on the chargeback process.
It is important to know that banks that issue cards, such as Citibank, Wells Fargo and Chase, earn a percentage of every transaction processed with their card. To that end, issuing banks want to keep their customers happy, ensuring their card will be used for future purchases. This is where I believe the consumer has the upper hand when initiating a dispute and the resulting chargeback.
To help even out the playing field it is vital that business owners take the proper steps when processing a card for payment, either in person or online. Please note that following some basic rules will help protect against disputes and chargeback’s’; however, it does not guarantee against a loss.
Chip or Chargeback – Face to Face Transactions
Business owners will lose every dispute, no questions asked, if they are unable to process a transaction using the chip on the back of the card. Visa and MasterCard recently provided business owners with a bit of a reprieve through the introduction of new regulations limiting the number of chargeback’s a business will absorb because of not processing a transaction using the chip.
Bottom Line – ensure you have a credit card terminal that allows you to dip a card and process using the chip.
AVS or Chargeback – Card Not Present Transactions
When a business takes payment for goods or services over the phone or online, they assume 100% liability for that transaction. One way to reduce liability is to adhere to the Address Verification System (AVS), which checks the billing address of the credit card provided by the user with the address on file at the credit card company.
Here is the catch. To protect against chargeback’s, the information provided must match what the credit card company has on file.
Here are the fields that need to be populated, with no exceptions:
- Credit Card Number
- Expiration Date
- Billing Address
- Billing Zip Code
- Invoice Number
- Security Code (protects against fraud)
To help business owners know if the AVS information provided is accurate, a response code is generated on the approval. A positive response code for MasterCard will be either “X” or “Y”, while a positive response code for Visa, American Express and Discover will by “Y”. The positive response code for a security code match for all brands is “M”.
Bottom Line – The AVS System was designed to provide business owners with information to determine if they would like to proceed with a sale based on the AVS response code.
At Clarity EPS our focus is to ensure business owners use best practices when processing a transaction either in person, over the phone or online. The key is to understand your role in the process, which in turn allows you to make the right decision as it pertains to your business. User error or lack of knowledge should never be the reason to pay higher fees.