Collect customer information up front
Communicate clearly and frequently
As a business that accepts credit cards from customers, it’s important to remember your customers have the same protections you do when using a credit card.
Chargebacks occur when your customer contacts their bank to dispute a payment appearing on their credit card. They do this for the same reasons you might dispute charges on your account. Examples include:
- Your customer is not satisfied with your product or service and believes that it doesn’t meet agreed-upon standards
- Your customer never received the product or service
- Your customer does not recognize the charge on their credit card statement
Collect customer information up front
In the event of a chargeback, your customer’s bank verifies that the cardholder participated in the transaction and that it was legitimate. Before you process a credit card transaction, know who your customer is by obtaining the following information for your records:
- Full name
- Billing address
- Shipping address, if different than the billing address
- Phone number
- Photo identification
Communicate clearly and frequently
Maintain clear, ongoing, and open communication with your customers. Consider reaching out to your customers to:
- Provide a status update on the project
- Notify them of any delays
- Make sure they are satisfied with the final service or product
Stay organized
How long a cardholder has to file a chargeback depends on the credit card company’s rules and the type of transaction. A chargeback can be filed for as long as one year after the date of the transaction.
- Keep relevant documents and communication for at least one year after the transaction is charged. This includes documentation like contracts and authorization forms, and any information communication like emails and
text messages. - Keep documentation easily accessible.
- If you communicate with clients over the phone, send follow-up emails detailing what you discussed and outlining the commitments made.
Be on the alert for fraud
Fraud is among the most common reasons a cardholder may initiate a chargeback. Protect yourself from fraudulent chargebacks by looking for these signs:
- Be cautious when working with new customers you did not target or source. Verify their name and credit card details and request to see their ID and credit card to ensure a physical match.
- Ensure you feel confident in the person you are communicating with and ask for additional information if needed. If it seems too good to be true, it usually is.
- If a customer is paying with multiple credit cards that decline, consider requesting a different source of payment, such as bank payment.
- If a customer is asking to wire funds to a third party, be wary.
Effects of chargebacks
Chargebacks can occur occasionally and have a financial impact on your business. Excessive chargebacks may indicate underlying problems with your business process, or how you are managing fraud risk, and may result in account restrictions to your Wave payments account.