Best Payment Processing Practices for Managing Invalid Chargebacks

Charged-back payments are bad business for everyone involved in the transaction process and the Credit Card Associations of MasterCard and Visa have set up complicated chargeback verification processes that help considerably minimize chargeback rates and substantially improve the chargeback process. These processes can also help minimize frivolous customer disputes and more importantly invalid chargebacks, decreasing their negative impact on the merchant's bottom line in the process.

Best Payment Processing Practices for Managing Invalid Chargebacks

Whenever the Credit Card Associations detect an invalid chargeback, they will return it to the card issuer that initiated it, and the business and its payment processing provider will never notice it. Most of these companies have also set up processes to regularly review exception items, allowing them to resolve issues before the chargeback has started. Taken together, these procedures ensure that all chargebacks that merchants actually receive are real or that the ones that get through the system can only be addressed by the merchant.

At the same time, although chargeback verification systems are becoming increasingly sophisticated and reliable, there is always a probability that an invalid chargeback will sneak its way by the system and into your monthly payment processing statement. What is more, a chargeback can get through the verification systems, as it adheres to all of the e-commerce merchant account provider's requirements, and yet be totally invalid. In these cases you will need to follow through as quickly as possible and submit your supporting evidence (like transaction receipts, invoices, etc.) to your merchant account provider as a proof that the transaction was valid.

Invalid chargebacks will never be altogether eliminated but you can greatly minimize their occurrence by designing and following through with a set of best payment processing practices for acceptance of credit cards. The way you accept and process bank card orders and other types of electronic transactions must be compliant with all applicable Visa and MasterCard regulations that were instituted precisely in order to help you minimize chargebacks and downgrades (the process of charging non-compliant transactions fees that are considerably higher than your advertised rate).

If the level of invalid chargebacks remains stubbornly high, even though you have invested all these efforts to reduce them and you have gotten help from your payment processing provider, it may just be conceivable that your acquirer lacks the expertise to resolve the problem and your best course of action could be to move to another service provider. Make certain that you do your due diligence when examining the various prospects and evaluate all sides of their service. Contact merchants that are currently using your prospective processor's platform and see if you can gauge their level of satisfaction. Bear in mind that the right acquirer can save you money and help your business grow.