A chargeback is the result of an action taken by a cardholder who disputes a credit card transaction through their credit card issuer. A chargeback can also be initiated by the issuing bank due to a technical issue, such as no authorization approval code received. This results in a reversal of a sale or credit transaction.

Tips for Preventing Chargebacks

Preventing chargebacks is often as simple as establishing consistent point of sale practices that are followed by all of your employees. Implementing the following tips can greatly reduce the possibility of chargebacks:

  • Never alter a sales draft.
  • Always obtain an authorization for the exact amount of the transaction processed to the card.
  • If authorization is declined for the full amount of the sale, don’t try to get an authorization by “splitting” or lowering the amount of the transaction.
  • If you can’t get a single authorization for the full amount of the sale, decline the credit card transaction. Request another form of payment.
  • Whenever a card does not successfully swipe and you have to key in a transaction, manually imprint the card and ensure the signature and all transaction information is transferred to the imprinted draft. Make sure the manual draft is imprinted with the merchant name and location.
  • When a customer is due a credit and the original sale was made on a Visa, MasterCard or Diners Club® card, process the credit back to the original card number. Do not refund by check or cash. If credit is due on more than one sale, process each credit individually.
  • Have your return policy pre-printed on the credit card sales draft and signed by the cardholder at the time of the original sale. The refund policy must be close to the cardholder’s signature to be recognized by Visa or MasterCard.
  • Always compare the cardholder’s signature to the signature on the back of the card. If the signature panel is blank, have the cardholder sign it. If the cardholder refuses, you should request another form of payment.
  • Respond to all returned retrieval requests with valid, legible documentation. After allowing Guardian Merchant Services two business days to process your response, call the automated voice system to confirm that your response was received and to get a confirmation number.
  • Be sure to compare the credit card account number on an electronically printed draft to the credit card number embossed on the credit card. If the numbers don’t match, call your Automated Voice Authorization Center and tell the operator that you have a “Code 10” authorization and that the card numbers do not match.

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