• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Submissions
  • About Us
  • Contact Us
  • Feb 2, 2023
  • Startup
    • Creating a Plan
    • Funding a Startup
    • Franchise Center
    • Getting Your Office Ready
    • Making Your Business Official
    • Marketing Your New Business
    • Personal Readiness
  • Run & Grow
    • Customer Service
    • Human Resources
    • Innovation
    • Legal
    • Operations
    • Risk Management
  • Leadership
    • Best Practices
    • Communication
    • Green Initiatives
    • Open Culture
    • Strategic Planning
    • People Skills
  • Sales & Marketing
    • Advertising and Lead Generation
    • Marketing Innovations
    • Marketing Plans
    • Online Marketing
    • Relationships
    • Sales Activities
  • Finance
    • Budgeting and Personal Finance
    • Payments and Collections
    • Tax and Accounting
    • Pricing Strategy
    • Working with Investors
    • Working with Lenders
  • Tech
    • eCommerce
    • Hardware
    • Software
    • Security
    • Tech Reviews
    • Telecom
  • Shop

SmallBizClub

Helping You Succeed

taxbandits banner
Home / Finance / Payments and Collections / How to Protect Your Online Business from Chargebacks
How to Protect Your Online Business from Chargebacks

How to Protect Your Online Business from Chargebacks

2623 Views

Sep 8, 2017 By Blair Thomas

By Blair Thomas 8/31

For many merchants, the internet presents a myriad of opportunities. An online enterprise is not only easy to set up, but it also enjoys a much broader reach of potential customers than the traditional brick-and-mortar layout. That said, the e-commerce scene is riddled with unique risks, through which a business owner must navigate to achieve success. Among those hurdles are chargebacks, which adversely affect cash flow and overall business growth.

If you’re new in the online market, preventing chargebacks can feel like an overwhelming undertaking. Nevertheless, the situation is not entirely hopeless. The first step is to understand the problem, after which you can determine the most viable ways of preventing it, or at least fighting it when it happens.

What is a chargeback?

Chargebacks were first designed to protect customers against fraud while shopping with their credit or debit cards. When a buyer files a chargeback, money spent to facilitate the transaction is returned to their account until the seller can prove that the sale was valid.

If the outcome of the case favors the customer, the merchant loses those funds and is left with hefty chargeback fees to pay. More often than not, the goods or services rendered in the transaction are also not recovered.

Cardholders are motivated to file chargebacks by several factors, ranging from scheduling and shipping errors to identity theft and cybercrime. Whichever the reason, however, it’s imperative that a business owner address the issue as efficiently as possible.

Chargebacks can cause damage fast

Although some chargebacks stem from legitimate causes, research has shown that most are instigated by fraudulent activity, either from untrustworthy customers or criminals.

Chargeback fraud can quickly escalate once fraudsters make repeat purchases with stolen credit card information and then shares their findings with fellow criminals. While you may be able to survive occasional chargebacks from amateur fraudsters, attacks by organized criminals can bring you to your knees.

The MATCH list

With a high number of chargebacks comes the risk of suddenly losing payment processing services. Even worse is, when processors close a merchant account due to excessive chargebacks, they typically report the business to the MATCH list.

In essence, MATCH is a blacklist of merchants whose previous processing accounts were closed because of issues like criminal dealings or chargebacks. A retailer on the MATCH list typically finds it hard to acquire financial services, and will often have to contend with higher rates from high-risk processors.

Guarding your online business against chargebacks

Chargebacks will almost always result from unsatisfied customers or malicious orders. As a first preventive measure, therefore, remain as open and as competent as possible to your shoppers. State your product descriptions accurately, and adhere to all the conditions as agreed upon with your customers. Also, follow up and find out if the purchased goods or services were to the buyer’s liking, and if not, try to solve the problem yourself so that you don’t give them a reason to file a chargeback.

To keep payment fraud at bay, involve processing company and inquire about any effective, legally-compliant policies they may have. In addition to chargeback protection, a reliable merchant account provider can also help you to implement modern techniques that streamline and optimize the way your business operates financially.

Although new technology is helping merchants to combat chargebacks, the opposite is also true. For customers, disputing a sale is now easier than ever before, and cyber criminals have more than enough tools to exploit. Therefore, knowing what chargebacks entail and using that information to improve your operations today can deliver you from crippling losses tomorrow.

Filed Under: Payments and Collections Tagged With: Chargebacks, Fraud, Payment Processing, Payments

Blair Thomas

Blair Thomas

Electronic payments expert, Blair Thomas, co-founded eMerchantBroker in 2011. His passions include writing/producing music, and traveling new and exotic places. eMerchantBroker is America’s Top Rated high risk merchant account processing company, serving both traditional and high-risk merchants.

Related Posts

  • 7 Common Types of Checks: What They Are and How to Spot Them
  • Fraud Protection: A Guide for Small Business
  • Stop the Scam with These Top 4 Ecommerce Fraud Prevention Tools

Primary Sidebar

bottom line ad

Random

10-entrepreneur-milestones-that-make-funding-easy

How Funding Data Can Improve Investor Outcomes

Feb 2, 2023 By SmallBizClub

two-key-digital-innovations-for-small-business

What Can You Do to Give Your Business a Boost?

Feb 2, 2023 By Charlotte Sylvester

5 Tips for Self-Financing Your Startup

Feb 1, 2023 By Lending Tree

Best Places to Buy Property in Portugal: Quick Overview

Feb 1, 2023 By SmallBizClub

4-services-you-need-when-moving-into-a-new-office

Key Factors in Choosing a Real Estate Agent to Sell Your Property

Jan 31, 2023 By SmallBizClub

Footer

About Us

Small Biz Club is the premier destination for small business owners and entrepreneurs. To succeed in business, you have to constantly learn about new things, evaluate what you’re doing, and look for ways to improve—that’s what we’re here to help you do.

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Copyright © 2023 by Tarkenton Institute, Inc. All Rights Reserved | Terms | Privacy