Day: July 29, 2024

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Best Business Practices: 3 Tips for Effectively Handling Credit Card Chargebacks

Constellation Payments |

If you take credit card payments at your business, you will, inevitably, at one time or another, face a chargeback. And resolving those chargebacks can eat up a huge amount of time and resources — something most small businesses don’t have much of.

The good news: with a little preparation and education, you can put practices in place to make the chargeback process a lot less painful — and way more effective. 

So, you got a chargeback notice. Now what? Follow these best practices:

1. Check the reason code

When you receive a chargeback notice, the very first thing you’ll want to do is check the reason code. The reason code will give you valuable details on the reason why the customer decided to dispute the payment in the first place.

Not only will this help you understand why the customer is disputing the payment, it may provide insight into how to prevent chargebacks for your business going forward.

For instance, one of the most common reasons for a chargeback is that the customer doesn’t recognize the charge on their statement. If that’s the case, you could consider using dynamic descriptors to make sure your charge descriptions are ultra-clear.

Side note: Dynamic descriptors allow a merchant to define what appears on their customer’s credit card statement regarding the purchase. You can include specifics like the product purchased, business name, business location, and contact information. An example of a dynamic descriptor would be: ABC Inc. Annual Membership Renewal 8885551212 versus a static descriptor like: ABC Inc. 8885551212.

2. Make note of important deadlines

After checking the reason code, you’ll want to make note of any important response deadline, since there is a limited timeframe to respond to a chargeback.

The typical timeframe to respond to a chargeback is 120 days; however, in some cases, the timeframe may be longer or shorter depending on the chargeback reason code.

Making note of the deadline to respond is useful in that it helps ensure you don’t miss the window to go to the dispute process, if that is how you decide to proceed.

3. Consider resolving through proactive customer service

Most times, a chargeback request is initiated by a frustrated customer that couldn’t easily recognize where the charge is from.

Before proceeding to the dispute process (a process that involves you, the merchant, having to provide proof that the transaction is valid and can also mean extra processing time and cost to you, and possibly a loss of revenue), consider taking a moment to contact the customer directly to resolve the problem.

Most times, the dispute process can be avoided by contacting the customer. Customers will appreciate that you took the time to proactively contact them and hear them out, and the customer will, most likely, reverse the chargeback by contacting their card issuer.

Again, this proactive contact could go a long way in not just providing stand-out service to your customer, but alerting you to issues that’ll help you prevent chargebacks from happening in the first place.

Chargeback prevention is just as important

While handling chargebacks in the most effective manner is important to your business, it’s also hugely important to put practices in place to prevent a customer from charging back a payment. For chargeback prevention tips, check out our blog article: 7 Ways to Proactively Prevent Credit Card Chargebacks.

If you’d like more information on chargeback prevention, and how Constellation Payments can assist, don’t hesitate to give us a call at 888.244.2160.

Last, but not least, sign up for chargeback alerts

How can you respond to chargebacks if you don’t know a chargeback occurred?!

A great layer of protection for your business is to sign up for chargeback alerts that notify you of any payment disputes posted to your account within 24 hours. You can choose to be notified by fax, or have the chargeback alerts sent by email and online alert. Setting yourself up with chargeback alerts helps ensure you can begin proactively handling chargebacks as soon as they occur.

To sign up for chargeback alerts, contact our Merchant Services Support team at 888.244.2160.

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Help! What Do I Do with Transaction Declines and Blacklisted Transactions?

Constellation Payments |

Declined. Seeing that word flash on your payment terminal, or on a transaction report, is sure to stir up angst in anyone.

But don’t fret.

You’ll be happy to know that with a little education, research, and action, every decline can be resolved. That’s right. Every. One.

Some of the most common declines you’ll see:

  • Authorization revoked
  • No account
  • Card stolen
  • Invalid card number
  • Insufficient funds
  • Card expired
How Should You Handle These Declines?

Some declines are of a softer nature, and are set to detect and prevent fraudulent activity, such as not passing the address verification service (AVS) check.

By collecting needed information, like an updated address or card verification value (CVV), you can simply reattempt the transaction through your software, and most often, the reattempt will be successful.

Other declines may require action by your staff and/or customer. You’ll need to ask your customer to contact their bank to resolve the issue for an authorization revoked decline before the transaction can be retried. For declines such as invalid card number and card expired, you’ll need to ask your customer for an updated card or payment method.

Blacklisted Transaction Report – Make Regular Review Part of Your Business Regimen

It’s important to note that once a transaction is declined, and it isn’t resolved by you or the customer, the transaction can be placed on a blacklist by Constellation Payments’ system.  These transactions are listed as blacklisted transactions and are reported back as such with the return response and the specific action required to update your customer’s account.

This process was created because reattempting transactions on an ACH account that’s blocked due to invalid or incorrect payment details can result in banking fines from the National Automated Clearing House Association (NACHA), or you, the merchant, could be charged excessive authorization charges for pushing repeated declined transactions. The Blacklisted Transaction Report helps ensure you aren’t fined for accounts you’re never going to get funds on.

By running and working the Blacklisted Transaction Report, you can be proactive and take the necessary steps to resolve your declines and reduce your decline ratio.  

This report can be retrieved through our reporting API or reported by your batch returns file.

The Big Takeaway

It’s not uncommon for a merchant’s declines to balloon due to repeat attempts on the same payment method.

The best course of action you as a merchant can take is to put more awareness around your declines and use the Blacklisted Transaction Report. By reviewing the reports regularly, and taking actions listed on the Blacklisted Transaction Report, you’ll reduce your declines, and ensure successful processing going forward.

We Can Help

We’re happy to review your declines and Blacklisted Transaction Reports to help create a plan of action for you to reduce your declines. Just give us a call at 888.244.2160 or send an email to sales@csipay.com.

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How to Fast-Track Your New Year Business Planning

Constellation Payments |

Do you feel it, too? That heavy weight on your shoulders to get your business plan in order? Pressure to plan for the new year, while meeting all the other work deadlines during the busy Holiday season?

We all feel it. Fortunately, there is a way to squash the stress and worry, and set your plan in motion — quickly.  

The answer? Your business management software and Payments Insider.

By running reports found in these two resources, you’ll gain important insights to guide your decision-making, and form key action steps that make up a solid business plan.

1. Start with the financial reporting in your business management software

Whether you’re using EZFacility, Member Solutions, Shortcuts, or another partner software integration, most software programs have dashboards and detailed financial reports that can be easily run and exported into Excel or PDF to review and share with your team at your planning meeting.

Start with the Accounts Receivable Report. Reviewing accounts receivable for this past year, and years prior, can shed light on both the flaws and opportunities in your accounting procedures, as well as in your sales and marketing processes, and general operations.

For example:

  • Maybe you find that you have too much cash tied up in unpaid invoices. This discovery could lead you to adjust your billing process in the new year, like activating automated recurring billing in your software.
  • Or, maybe you find that a seasonal sale drove a surge of paid-in-full membership packages. Knowing this confirms that you should repeat that same promotion in the coming year.

Whatever the case may be, this financial report — along with other financial reports like package sales, active members by programs, revenue report — tell the story of what actually happened during the year. From this data, you can gain insights to make solid, data-based decisions and create action items that make up your business plan.  

2. Review your merchant processing statements in Payments Insider

Not familiar with Payments Insider? It’s well worth taking a moment to set up your account. Payments Insider is the online portal that houses all your business’ payment information.

The portal makes it easy to access your merchant account credit card statements from the past 13 months. Statements can be filtered by date range, location, and statement type.

One of the best features of Payments Insider is that you can click on any of the values in the statement for greater detail.

Payment Insider also provides tables and graphs that break down transactions by sales, returns, chargebacks, card/dollar/transaction amounts, and average ticket price.

These visual representations of your payment activity can help you quickly identify areas of strength, and those that could use a little help.

For example:

  • Maybe you find that chargebacks have increased this year. This finding could lead you to take steps to prevent chargebacks, like making your charge description clearer on the customers’ credit card statement, or adding your phone number as part of the charge description.
  • Or, maybe you find that sales grew in the Spring and declined in the Summer, steering you in the direction of implementing a Summer special to draw in more business.

Taking Action is Crucial to Achieving Success

Remember that the financial reports in your business management software and merchant processing statements in Payments Insider is just the start.  

The key to achieving success in the new year is to take what you’ve learned and act. What good does it do if you simply know that something worked, or didn’t, and you don’t take action to repeat the success or take a step to improve a process or procedure?   

Implement a plan. Act. Assign action steps to staff. And, rest assured knowing your new business plan is now rooted in data-backed decisions to help your business grow and improve regularly.

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What’s the Visa and MasterCard Purchase Return Authorization Requirement? A 1-Minute Rundown

Constellation Payments |
Global POS photo

Just as you are required to obtain an authorization that gives approval to process a sale, starting April 2020, for Visa and MasterCard purchases, merchants will be required to obtain an authorization for a return/refund.

Why is this happening? What are the benefits of authorizing a return?

Historically, returns and refunds did not require an authorization. Returns and refunds were simply processed when a batch was settled. 

Authorizing a return has multiple benefits for the customer, as well as for you, the merchant. 

Customer Benefit: the main benefit will be the clarity customers have into the refund being issued. The new return authorization process will improve customers’ overall experience and help facilitate customer service inquiries related to the status of refunds.

Merchant Benefit: The new return authorization process will give merchants the ability to check the validity of the card to process the refund. Merchants will also receive an approval or decline response code at the time the refund is being issued. This process will, in turn, reduce chargebacks and fraud by providing proof that the refund in now in progress.

Some Response Codes include:

Approved

Code 00 | Approval
Finalize the refund and credit the account.

Code 85 | No reason to decline
This can also be considered an Approval. Finalize the refund and credit the account. 

Declined

Code 14 | Invalid account number or account type
The account for this card is not recognized. Tell the cardholder that the bank doesn’t recognize the account. Request an alternate card of the same brand type (If the refund is on a Visa, then request an alternate Visa card. If the refund is on a MasterCard, then request an alternate MasterCard.)

Code 57 | Transaction not permitted to cardholder 
This response code could be triggered due to a pre-paid card that doesn’t accept refunds. Request an alternate card of the same brand type for payment, or a different form of payment such as cash. 

When do these changes go into effect?

The Visa and MasterCard Purchase Return Authorization requirement is mandated by April 14, 2020.

As of April 14, 2020, issuers (the bank or credit union that issued the credit/debit card to your customer) will be able to initiate a chargeback on a return transaction that does include an authorization.

It’s important to note that the issuer holds the liability for an authorized return sent for settlement. The merchant holds liability for an unauthorized return sent for settlement. 

When can I expect the returns process in my POS software to be updated?

Our next payment gateway release is scheduled for Fall 2019. Within this release will be new functionality that will enable you to obtain an authorization for your returns/refunds through your POS software.

In other words, when initiating a return or refund in your software, you’ll receive a response code as listed above. This process will help provide fraud protection and chargeback prevention as you’ll be able to check the validity of the card being used to process the refund. 

Have more questions about the upcoming Purchase Return Authorization Requirement, or how our payment solutions can help you run your business more efficiently? Give us a call at 888.244.2160 or post your question below. 

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