By Steve Schwimmer
Renaissance Merchant Services
Chargebacks result from disputes between cardholders and merchants. They have always been problematic, but they are part of the business climate and cannot be ignored. And, if merchants follow certain business practices, they can operate virtually chargeback free.
As ISOs and merchant level salespeople, the sooner you broach the subject with your customers, the better it will be for your business and theirs.
While you don't want to dwell on anything negative in an initial sales interaction, keep in mind that an ounce of prevention is the best cure. If you educate your customers, you are doing your job right. Work with them on understanding how chargebacks affect them, their customers, card issuers and processors.
From time to time, merchants' goods and services will not live up to purchasers' expectations. Provide sound advice so that your clients are prepared for this eventuality.
A solid customer service policy explaining the terms by which merchandise can be returned, and in what condition, is essential. Customers must know what they can and cannot expect.
Cite examples of merchants who have set up exemplary policies, and discuss the various methods they use to inform shoppers about their returning merchandise.
Such policies should be disclosed upfront in a straightforward format and easy-to-understand language. This is true regardless of whether a sale is face-to-face, MO/TO or via the Internet.
A chargeback begins when the cardholder contacts the issuing bank and complains about a transaction. The issuing bank sends the complaint to the processor, which then contacts the merchant in the event of a retrieval request or chargeback. Depending on the reason for the action, there may be a temporary reversal of funds in the merchant's account.
Merchants need to understand a chargeback initiates with the cardholder's interpretation of what has happened. It is the merchant's responsibility to provide proof disputing the chargeback.
When responding to chargeback notices, merchants must adhere to specific time frames. Otherwise, they will lose by default.
Once a dispute arises, the merchant involved must provide a detailed written record of what transpired. The merchant should convey concise facts supporting a rebuttal. Complete, clear responses to the card issuer are vital to the process.
Facing the chargeback bugaboo head on will help your merchants understand that setting clear policies for returns will not only lower the amount of chargebacks they experience, but it will also provide a base for an effective customer satisfaction program.
When you approach this subject properly, you will assist your customers in establishing good business practices. This will have a trickle-down effect, enhancing your reputation as the transaction specialist. Steve Schwimmer is President of the National Association of Payment Professionals. He has been serving the payment processing industry since 1991 and is the Long Island Director of Sales for Renaissance Merchant Services. Call him at 516-746-6363 or e-mail him at thevisaguy@516phoneme.com
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