Entries tagged with “chargebacks”.
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Apr 28 2015
As a small business owner, you need to know about every little thing that happens in your company. You need to know about inventory, profit margins, marketing, and employee retention to name a few. Whether you accept payments online, with a smartphone, or in a brick and mortar store, accepting payment from customers is a vital part of becoming profitable. Here are three payment terms you should know.
Chargebacks happen when customers file a dispute with their bank or credit card provider about a charge they disagree with. The disputed charge might be a result of technical or clerical error (being charged twice or charged the wrong amount) or it might be a quality issue, where the goods received are not what was purchased. The most common reason for a chargeback, however, is a fraudulent transaction. Chargebacks can protect customers from fraud, identity theft, and error, but if they are abused they can cause problems for your business. To avoid chargebacks you should gather detailed information from the customer, (billing address, shipping address, etc.) and be as accurate as possible in all your record keeping. Providing fantastic customer service and making your customers fully aware of your return policy can also help prevent chargebacks.
2. EMV/Chip Cards
EMV stands for Europay, MasterCard, and Visa who banded together to set standards for authenticating credit and debit card transactions. Together they formed a company called EMVCo that promotes the use of “smart cards”. Smart cards contain a micro-chip that can hold far more information than a traditional magnetic stripe. Because a smart card can hold more information, they can support multiple methods of authentication, making them more secure than a magnetic stripe alone. Instead of relying solely on matching a signature with a card, EMV cards require the use of a PIN. This PIN can be authenticated either online, with the PIN being encrypted and verified in real time, or offline, with the PIN being verified by the EMV card itself. While EMV cards are far more secure than the standard magnetic stripe cards, that doesn’t eliminate the need to have data security. EMV cards are common in Europe, and are becoming more common in the U.S. In October 2015, several major credit card providers including American Express, Visa, MasterCard, and Discover will be implementing a liability shift for point of sale terminals. This liability shift means that merchants and card issuers not using EMV compliant cards assume liability for all fraudulent transactions. If you want to be on the cutting edge, you might consider figuring out how to accept multiple payment methods, so you can still accept magnetic stripe cards as you and your customers upgrade to the more secure EMV cards.
3. Magnetic Stripe Cards
Magnetic stripe cards are the most common type of card in the U.S. However, since these cards rely on a visual authentication via a small hologram and the cardholder’s signature, these cards are far from secure. These cards are easily counterfeited and far more likely to result in security breaches so it is vital to secure your financial information to protect yourself and your customers. A good payment processor will keep customer financial data secure, even with the less secure magnetic stripe cards. While magnetic stripe cards are far from the most secure method of payment, they are still the most common payment method, so you can’t just default to accepting only the more secure types of payment. New payment methods like the EMV card, Apple Pay, and Google Wallet are becoming more and more common. Being able to accept these newer, more secure forms of payment while still accepting magnetic stripe cards is becoming a necessity.
Knowing these three vital payment processing terms can help you protect yourself and your customers’ financial data. It will also keep you on the cutting edge and help you know how you need to prepare for the future.
Since 1997, ProPay has provided simple, secure and affordable payment solutions for organizations ranging from the small, home-based entrepreneur to multi-billion dollar businesses. ProPay is a leading provider of complete end-to-end payment security solutions that reduce, and may even eliminate, an organization’s risk of having sensitive payment data compromised. ProPay can help you:
- Enable merchants to quickly begin accepting credit and debit cards through instant underwriting
- Secure payment data
- Reduce compliance obligations
- Reduce overall transaction costs
- Enable companies to ACCEPT and MAKE payments in multiple international currencies
Apr 23 2015
When a customer decides to return an item, he or she can either return it for a refund or store credit, or they might initiate a chargeback. But what is a chargeback? How is it different than simply returning an item?
A chargeback is when a customer files a claim with his or her bank or credit card provider to recall funds from a merchant, rather than dealing with the merchant directly. A chargeback can be issued for a number of reasons including:
- Technical Error – when there is a technical error with the card or bank
- Clerical Error – when a transaction is billed incorrectly
- Quality Issues – when goods are not received
- Fraudulent Transactions – when a customer claims that he or she did not authorize a purchase or is a victim of identity theft
Chargebacks are mostly in place to protect consumers in cases of error, fraud, or identity theft. It keeps them from being held responsible for purchases they didn’t make, or for incorrectly billed purchases. However, there are some who abuse chargebacks, which could cause your business major problems. So how can you avoid chargebacks?
1. Make sure the billing and shipping information is complete and accurate.
If a customer never receives a purchase because it was shipped to the wrong place, you could not only lose the item and the money you would have received, but you could also lose the customer. You can’t prevent user error, but you can ask if the billing address and the shipping address should match—and they usually do. You can also ask customers to confirm their address before you proceed, to make sure that you are being as accurate as possible. In addition to ensuring address accuracy, you and your customers can track packages to ensure safe, on-time delivery.
2. Make sure credit card information is complete and accurate.
When processing a “card-not-present” transaction—where chargebacks are most likely to occur— do all you can to ensure accurate credit card information. You could use a service that makes sure you can’t authorize an invalid or expired account, reducing your risk of a chargeback. Another important piece of information to obtain is a card’s CVV2 (card verification value) number. A CVV2, sometimes called a CVD (card verification data), CVN (card verification number), or a CSC (card security code), is a three- to four-digit code usually found on the backs of credit cards, under the magnetic strip, next to your signature. Having this code can help ensure that you are accepting payment from the cardholder.
3. Provide excellent customer service.
Providing excellent customer service throughout a customer’s experience with your business could encourage him or her to simply return or exchange a product, rather than initiating a chargeback. It will also encourage your customers to continue their business relationship with you even after a return, rather than terminating it all together.
4. Be straightforward from the beginning.
Making sure that your customers are aware of your return policy is another great way to avoid chargebacks. Whether you offer a return of funds or in-store credit, a return is far easier to deal with than a chargeback. Informing your customers of your return policy at the time of purchase, and making it easy to find later on, can go a long way in preventing chargebacks.
While you probably can’t avoid chargebacks altogether, ensuring accurate customer information, providing excellent customer service, and being straightforward from the beginning can decrease your risk of customers initiating chargebacks.
Mar 30 2015
Posted by snelson
Mobile Payments, Risk/Fraud
If your small business is taking credit card payments through a credit card processor, then you may have had to go through the often long and painful chargeback process. If you haven’t, you should probably learn as much as you can so you can be fully prepared. Chargebacks are one of the more frustrating realities of accepting credit card payments, but they can be much easier to handle with a little background knowledge of how the process works.
This infographic displays the chargeback process step-by-step, from the customer’s request of a chargeback to the resolution of the case. Check it out to learn more about what you can do to speed the process along, and to get a favorable resolution more frequently.
Aug 2 2012
“When good people…cease their vigilance and struggle, then evil men prevail.” - Pearl S. Buck
When I was learning to ride a motorcycle my instructor gave me one piece of advice that always stayed with me. He said “keep your head on a swivel.” In other words, while I had to make sure that I was doing everything I should be doing, I also had to make sure that I was constantly looking out for what other people may be doing. That way I could correct my course, or at least take some action to ensure that what the other people were doing wouldn’t put me in danger. While this is certainly good advice for riding motorcycles, it is also good advice for data security. It may seem like a stretch, but bear with me.
In securing our customers’ payment data, we have a guideline (actually a set of fairly stringent requirements) in the form of the Payment Card Industry Data Security Standards (PCI DSS). To learn more about these standards visit this site. Following these guidelines ensures that we are doing what we “should” in terms of protecting the data. But that doesn’t mean that others won’t be taking action to put you (and your data) in danger – in the form of data compromise. That means that you have to stay vigilant for what others might be doing – “keep your head on a swivel” – to ensure that you are addressing newly identified risks and vulnerabilities that may not be addressed by the guidelines.
Recent trends indicate that small merchants are increasingly becoming targets of data thieves. In a recent interview, Vantiv Vice President David Mattei stated, “…now we’re seeing an increase in the number of breaches in which smaller numbers of cards are compromised. Small, independent merchants are being targeted because of the ease with which fraudsters can compromise those payment systems.” That means that as small merchants, even if we are PCI DSS compliant, we must remain vigilant against potential attack. One way to foil the fraudsters in this case is with the use of a P2P Encryption and tokenization solution. In this instance, the data is removed from the merchant system and replaced with “tokens,” or abstract representations of the cardholder data. While merchants can still use the data to run reports, issue refunds or fight chargebacks, data thieves would find the tokens to be worthless.
The lesson in all of this is that we must remain on guard against new threats, even if we are doing everything “by the book.” Leveraging secure technologies like tokenization can help ease the burden of compliance and render you and your customers more secure in the long run.
Jul 24 2012
Posted by hmark
Sometimes it is the small things that make a difference. I had a conversation with a friend last week about the pros and cons of using a payment aggregator for processing, as opposed to a traditional merchant account. While we had a pretty lengthy discussion ranging over a variety of topics, there was one detail that stuck in my colleague’s mind. I had asked how her merchant name shows up on receipts. She hadn’t thought about that before and said she was going to go back and check it out. Sure enough, she said, the merchant name showed up as something that even she would have found difficult to recognize as her business. Why does that matter? One word – chargebacks.
Often when customers don’t recognize the name on their statement, they will call their issuing bank and chargeback the purchase. If your merchant name is not immediately recognizable to customers on their statements, you run the risk of getting hit with unnecessary chargebacks. Not only does this result in one-time charges and fees to the merchant, but repeated chargebacks can result in increased fees and may even cause processors, whether traditional processors or aggregators, to suspend the merchant’s ability to process payments.
This is a fairly easy thing to check, and to fix. If you are unable to change your merchant name, and there are some legitimate reasons why that might be the case, then make sure your customers know what to look for on their statements. This can be done either as a message on the receipt or on your website. If you have a storefront, you may place a sign next to the register. Anything that might reduce the likelihood of confusion on your customers’ part can help you reduce the likelihood of chargebacks.