Chargeback vs. Refund: The Differences Matter for Small Retailers
Filed under: Credit Card Processing
Do you know the differences between a chargeback and a refund on credit card transactions? Even though these terms are often used interchangeably in the retail industry, there is a difference between the two situations.
With both situations, you lose the sale, and the money is reversed. It is important that you avoid both of these issues. There are a few things that you need to know so that you can take a proactive approach to reduce the risk:
Refunds
In the retail business, refunds might be requested due to poor quality products, damaged items, late delivery, or delivery of the wrong merchandise. If a customer requests a refund, you have the option to accept or reject the request. When you agree to honor the refund, then the credit is applied so that the money is put back on the customer’s card.
Chargebacks
Chargebacks are also initiated by the customer. But, instead of contacting your business, the customer goes straight to the credit card company or bank to file a dispute. The bank can then decide to credit the person’s account.
Preventing Chargebacks and Refunds
There are several things that you can do to reduce the risk of transaction reversal. For example, make sure that you have a clear return policy for customers to view before they make the purchase. Also, be sure that you offer excellent customer service, ensuring that people are satisfied with the products or services they receive. Selling high-quality services and products improve the likelihood that your customers will be happy.
You should make sure that you are using a payment processor that accurately shows your brand on the credit card statement. The customer should see your business name on their monthly statements. If someone sees a transaction that they don’t recognize because it doesn’t reflect your company information, then it increases the likelihood that they will request a chargeback.
Eliminating chargebacks and refunds is impossible. But, you can reduce the risk on your company when you choose a reputable merchant service. Learn more by talking to Rick Johnson at National Merchant Services about the options that are available: 888-891-0811
