Top 5 Ways to Reduce Chargebacks 

Chargebacks, or a reversed transaction, is a term dreaded by internet and other high risk merchants. When a company is faced with a chargeback, money is deducted from the account rather than added; which means profits that the high risk merchant expected disappear, often through no fault of their own. Chargebacks can cause not only immediate problems, but can also result in the loss of your company’s high volume merchant account. If your business experiences too many chargebacks, you will find yourself on the Visa/MasterCard Terminated Merchant File (TMF/MATCH list) for several years, and many Merchant Account Providers will refuse to serve businesses that are on this list. 

So, what can high risk merchants do to reduce the number of chargebacks they experience? While there are no guarantees when it comes to business, there are some ways to drastically reduce chargebacks. The following are five suggestions for companies that currently have, or are in the process of getting, a high volume merchant account:

1.      Verify CVC2 and CVV2 Numbers: This one process can end up reducing the number of chargebacks to a high risk merchant by up to 26%, according to the experts at Visa. These three digit security codes are located directly after the credit card number on the back of MasterCards, Visas and Discover Cards; while American Express has these numbers located right on the front. If you are on online merchant, you can use a payment process that supports entering these codes during the time of payment processing; however every gateway provider is unique, so you will need to contact your provider for all the details.

2.      Utilize the Address Verification System (AVS): The AVS is a process that checks to make sure the address entered on the order form matches the cardholder’s billing address. This helps because anyone who is trying to use a stolen card number will not use the actual cardholder’s address, which means this may be your best chance to put a stop to the order before it is too late. High risk merchants who do not use AVS will end up paying higher credit card processing fees. This service is only available with orders conducted in the U.S.

3.      Let your Customers Know what Name will Appear on Statements: It is common for high volume merchant accounts to use a 3^rd Party Processing company, which means your customers will see an unfamiliar name on their statements rather than the company name from which they made their purchase. In order to stop your customers from disputing these charges, clearly post the name of the 3^rd Party Processing company, and avoid any unnecessary confusion.

4.      Be Wary of Order that Lists Free E-Mail Addresses: It is very difficult to completely avoid customers who use free e-mail addresses such as Yahoo and Hotmail, but every high risk merchant knows that these types of addresses make it almost impossible to track the user. The best approach is to watch these orders closely to make sure they do not result in a chargeback.

5.      Post a Clear Warning Message Stating that IP Addresses are Logged. High risk merchants that operate on the internet should always post a warning message on the order page that is clearly targeted to fraudulent orders. Mention that the Internet Protocol (IP) addresses are constantly logged, and that these addresses help to track down order fraud. 

Taking proactive measures to eliminate fraud and reduce chargebacks is one of the primary activities of high volume merchant accounts. Your high risk business can rest assured that risk management companies are constantly working to develop solutions that will provide extra protection for internet, as well as brick and mortar, businesses just like yours.

High Risk Processor specializes in High Risk Merchant Accounts, High Volume Merchant Accounts and Offshore Merchant Accounts. High Risk Merchant Accounts include such industries as mail order, telephone orders, adult entertainment industry, direct marketing industry, dating, online dating and escort services, outcall services, travel, telecom, timeshares industry, herbal supplements, diet companies, subscription services, membership services and clubs, ticket sales, MLM merchant accounts, multi-level marketing businesses, bail bonds, pawn shops, water filtration systems merchants, collection agencies, auto rental companies, rare coin and collectible shops, computers, custom design products, software sales and service, detective services, door to door sales, massage parlors, gun shops, hair restoration services, cosmetic surgery, high-end ticket sales, high volume merchant accounts, home based and telecommuting businesses, fortune tellers, infomercial merchant accounts, insurance products, investment products, custom jewelry sales, multi level marketing, MLM organizations, phone sales, internet businesses, seminars, educational institutions, sports collectibles, used auto sales, water purifier sales, weight loss centers, vitamin and supplement stores, international merchants, companies facing high chargebacks, etc.