People love paying with credit cards. For ecommerce sites, taking credit card payments is an essential part of doing business. Every 30 seconds, ecommerce sales generate more than $931,000 from desktop computers and add nearly $270,000 from mobile technology. The problem is that along with legitimate sales come fraudulent ones. Credit card fraud cost the global economy more then $16.3 billion in 2014. Credit card fraud costs the United States economy more than $8 billion each year. While it may be impossible to prevent every card not present chargeback, there are steps merchants can take to minimize their risk and exposure.
- Do what you can to verify the card. When people make online purchases, clearly they are not in the store and in front of a staff member with their card. It can be easy to ask for ID or look at the photo on the credit card. That does not mean ecommerce sites are helpless when it comes to preventing the card not present chargeback. Many credit card processors have protocols in place to help merchant accept credit cards online. You can use software to get the customer’s IP address, digital signature and verify the billing address. MasterCard and Visa have verification services to help prevent fraud and give you secure payment options.
- Use shipping methods that require a signature. It is a lot harder for a customer to claim they did not receive an item that they signed for. It is not impossible but if you use Federal Express or the United Parcel Service, even the United States Post Office can get signatures, use the services that require the customer sign for the package. This way you can talk to the customer when they claim they did not get a package. Remember, if the package in question happened to be sent during a time of the year when people receive a lot, such as during the holidays, there is a chance it is in their home but they do not realize it. When you talk to customers, do not assume they are trying to steal something. There is a very real chance they signed for the package, put it away and then forgot where they put it. For all you know, they panicked because they cannot find the present they bought their mother in law.
- Make your payment descriptor make sense. Your store name may be different from the name that appears on the bill. When this happens, a customer might call their credit card company saying they do not recognize a charge on their bill. If your store is called “Squirrel’s Nut House” because you sell different nuts but the payment descriptor is the name of your parent company, “Morrison Financials,” people who bought their pecans from you will be justifiably confused when they get their bill. Either include a “doing business as” on your bill or find a way to let people know that their bill will say something different from your store name.
- Provide outstanding customer service. This will not prevent a card not present chargeback from being filed but it can help resolve the issue. Say your customer disputes a charge because the items they received were not what they expected. Maybe the color of the clothing looks a lot different when they get the item than it looked on their screen when they ordered it. That happens. Most credit card payment services let merchants know when a dispute has been filed. You may be able to resolve the issue in a way that is good for everyone.
- Pick your battles wisely. When you get too many chargebacks, it can hurt your relationship with the merchant account provider and each card not present chargeback does cost you money. You lose the sale and may be charged a fee each time. It might not make sense to fight every card not present chargeback, especially those that you know you cannot win. If you find one that is worth a lot and you can win it, you should fight it. If you are getting more of these than in the past or than other, similar businesses are getting you may want to look into retaining the services of a chargeback management firm.
