Chargeback is one of the worst words for merchants today. While they are a huge pain, chargebacks are a part of any business that accepts debit and credit cards. Originally chargebacks were used to protect consumers from charges made fraudulently, along with keeping merchants accountable and honest. However, today chargebacks are used by many more people and can feel like a vendetta.

1. The Chargeback
Cycle

2. Chargeback is one of the worst words for merchants
today. While they are a huge pain, chargebacks are a
part of any business that accepts debit and credit
cards. Originally chargebacks were used to protect
consumers from charges made fraudulently, along with
keeping merchants accountable and honest. However,
today chargebacks are used by many more people and
can feel like a vendetta.
Like a credit card chargeback, a chargeback
from a debit card is a reversal of the
transferred funds. A chargeback requires the
consumer to directly contact their bank. Their
bank then contacts your bank, and the money
is returned to the consumer.
What is Debit Card Chargeback?

3. To start achargeback a customer has to go their bank, and file
their dispute against any transaction that is false or they were
not provided service for. Their bank or the issuing bank will
issue them a temporary credit for the amount of the
transactions.
The issuing bank then informs the credit card company about
the chargeback. The credit card looks into the transactions and
contacts the business’s bank. The business’s bank contacts the
processing company, which removes the money from the
business’s bank account. The business is then contacted about
the chargeback. At this point, there is the choice to just allow
the chargeback to take place, or you can fight the chargeback.
You can fight chargebacks. However, as originally chargebacks
were designed to protect consumers, you will need to provide
proof that you are in the right. The problem is even if you win
all the cases of chargebacks, having too many will harm your
business’s reputation. This causes your account to be frozen, or
your whole account to be terminated. There can also be
criminal charges and investigations done. Along with those,
there are also huge chargeback fees that are debited from your
account if you lose the fight or choose not to fight
chargebacks. The best thing that a business can do is to avoid
chargebacks in the first place.
To fight a chargeback, a business’s needs to fill out paperwork
and provide proof of the transaction to the issuing bank. The
issuing bank will contact the credit card company, for more
information about the transaction. After the issuing bank has
all the information about the transaction, they look all the
documentation and make a decision. This could take just a few
days to a few months depending on the credit card company,
as some have delays in their sending of information. If the
chargeback is found to be wrongful, the money is given back
to the business, and the temporary credit is taking away from
the customers. If the document is rejected, the temporary
credit turns into permanent funds.
The Chargeback Cycle

4. The simplest solution to not having
chargebacks is to not accept debit and credit
cards. However, in today’s modern world you
have to accept debit and credit cards. At the
same time, there are some things that you can
do to limit the amount of chargebacks you
receive. The first is to have a refund policy that
is easy to understand. Unhappy customers just
want their money back. Having a refund policy
makes it easy to do this. Chargebacks take time,
and most consumers would prefer just walk in
and get their money. The second is to always
check the signature and the card. Having a
customer sign a receipt is a pain, but it helps
you fight chargebacks. You should also make
sure that the card is signed and not expired. If
the card in not signed or is expired, do not
accept it. The reason for this is that expired
cards could pay for the item, and then charge
you later.
HAvoiding Chargebacks