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Avoiding Charge-Backs

By: Bluefin.com



A charge-back is a credit card processed sales transaction that occurs when your customer disputes the transaction or when you fail to follow proper credit card acceptance and authorization procedures. The result of a charge-back is a reversal of the transaction, the withdrawal of funds from your merchant account and a deposit of the funds back into your customer’s account.

The most common reasons for charge-backs are:

  • The customer does not recognize the merchant’s name on their credit card statement;
  • The customer was charged for a purchase more than once;
  • The merchant failed to deliver the product or service;
  • The customer was dissatisfied with the product or service;
  • The customer claims that the purchase was fraudulent.

What Charge-Backs Cost You

Incurring a charge-back could include the lost value of the sale (including shipping costs), a possible charge-back processing fee, and non-reimbursement of the transaction fee associated with the original sale. Merchants that incur excessive charge-backs can expect:

  • Possible fines from the card associations;
  • Higher processing rates on your merchant account;
  • Being labeled a high-risk account;
  • In extreme circumstances, losing your merchant account.

Steps to Avoid Charge-Backs

There are several steps you can take to avoid charge-backs, including:

  • Never charging the sale before the item is shipped;
  • Never accepting a declined sale;
  • Not attempting a second authorization on a declined sale;
  • Following the proper procedures for processing the sales transaction;
  • Ensuring your customers know your business name and return/refund policies.


Published: June 11, 2013

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Headquartered in Atlanta, Georgia, Bluefin Payment Systems is the leading provider of customized payment services specifically developed for Independent Software Vendors and their clients in the U.S. and Canada. We are focused on offering integrated solutions that generate ISVs new revenue, and increase your client acquisition and retention. Bluefin is led by industry veterans with decades of payment processing experience. We know the importance our ISV partners place on client satisfaction.

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