Chargeback Basics You Should Know

Article Submitted by:  Solid Trust Pay.

Being able to accept credit card payments is great for your business. It can increase sales and will attract more customers while giving you a competitive edge over your competitors. But along with all the benefits, credit cards also come with a degree of risk, the most important aspect which you need to be well versed on being chargebacks.

What is a chargeback?

It is when a credit card holder disputes a charge on his credit card statement with his credit card company and the amount of the transaction which had been credited for the disputed transaction having to be debited to the card holder’s account. The most common reasons for such disputes are:

• The payment not been authorized by the card holder. This can happen when the credit card has been stolen resulting in a fraudulent transaction.

• The card holder has ordered a product online and has not received the product. This can be a result of the card holder acting fraudulently but the result will be that the merchant will be held responsible and will be charged accordingly if he cannot prove otherwise.

• Credit is not processed. In the event the customer has returned the product he purchased with the credit card back to the merchant due to the product not being what was ordered and requested for the payment to be refunded, but it has not been returned.

• Technical issues resulting in the customer being charged twice for the same transaction.

The process

The chargeback process begins when a customer makes a complaint to the credit card issuing company regarding a particular charge on his card. The credit card company will refer the matter to the relevant merchant bank that will in turn refer it to the merchant who will have to provide proof to show that he did in fact provide the goods or services in question. This can be proved by providing sales receipts as evidence. If the merchant can prove that the transaction was a valid one he will not be responsible for the chargeback but in the event he is unable to so do he has to inform acceptance of the chargeback to the merchant bank and debit the customer’s account with the relevant charge.

The effect on the merchant

A chargeback involves a cost to the merchant including fees charged by the merchant bank and the considerable amount of time spent to fight the chargeback and if you cannot prove otherwise you will have to refund the money and if you have already sent the goods to the customer bear the cost of the product and shipping costs as well.

The worst is if you have a high rate of chargebacks you will be considered as a high risk merchant by the merchant banks and will face the consequences.

Understanding How A Merchant Account Actually Works

Online businesses are always competing for consumers in the market space.  The unfortunate reality though is that there are new boundaries that need to be crossed in order for an online business to just survive.  Being able to accept credit cards is integral to the survival of an online business.  Thanks to the introduction of merchant accounts, online businesses are now able to accept credit cards far easier than in the past.

Merchant accounts are not as complicated as you may think.  Merchant accounts are basically an intermediary between you, the online retailer, and the credit card company.  When you make a sale on your site and take in credit card information, the credit card information is not automatically sent from your company to the credit card company.  Instead, the merchant account actually takes in the credit card information securely.  They then transmit it to the credit card company, whether it be Visa, MasterCard, and so on to receive the payment.  The merchant account will then send the finances to your bank account, in exchange for a small fee.

Solidtrustpay.com has become an integral partner for many online businesses to be able to accept credit card payments.  Solid trust pay has grew in popularity with their extremely low monthly fees and transaction fees.  Solidtrustpay is a great choice if you need to grow and start accepting credit card payments.  At the end of the day, you need to stay competitive and you need to grow your business.  Online merchant accounts may be the tool you need to reach that new level.