Grow Your Knowledge

Understanding Chargeback: A CHARGEBACK occurs when the funds paid into the merchant account are reversed and refunded to the cardholder. The chargeback documentation can tell you why the cardholder is disputing the transaction. Cardholders are given two months from the date of the transaction to make a claim. In addition to the reversal, the merchant is typically charged a service fee for the chargeback. Sometimes the bank will issue a chargeback even before notifying you of the claim. Unmerited "disputes" are common and most instances are settled in favor of the cardholder. Chargebacks can cost the merchant additional fees and if they occur too frequently, can jeopardize merchant account.

Here are a few tips on how you can minimize the chances of getting a chargeback:

  Check the cardholder’s signature: compare the first letter and spelling of the surname on the receipt with the signature on the card.

  Use a manual imprinter (not pencil, crayon, or any other writing instrument) to capture the impression of the card. Even if the transaction is authorized and the receipt is sign, there is still a chance that fraud may occur.

  When the customer's shipping address and the credit card billing address do not match, contact the customer to ask him/her to explain the difference.


Make sure the transaction information on the receipt is legible, complete, and accurate.
In any chargeback case you will have to fax/email the receipt to the bank and if the receipt(s) is illegible,
you may lose the case just based on that fact.


Fraud Prevention Solutions:
SW Merchant Services Group offers tips on fraud protection. Consumers are very concerned about credit card theft. Credit card fraud is something that can never be completely eliminated, but rather something that must be managed through practices by the merchant. Here are preventative tips that can you can perform to limit credit card fraud.

Always use Card Verification Methods (CVM).
Card Verification Value (CVV) is the three-digit code on the back of a credit card (four digits for American Express). The card holder’s CVV code is verified by the card issuing bank when the credit card sale is being processed. If you do not receive a CVV match you should consider declining the transaction. Online merchants should make CVV a required field.

An authorization on a credit card does not mean you are safe from fraud.
Approved authorization does not guarantee payment. Approval only indicates that at the time of purchase, the card hasn’t been reported stolen/lost or the card limit has not exceeded. If someone is using the credit card illegally, the card holder can dispute the charges.

Be wary of different “Bill” and “Ship To” addresses.
Require anyone who uses a different “ship to” address to send a fax/email with their signature and credit card number authorizing the transaction. If the billing and shipping addresses are different, request telephone numbers for both addresses.

Always get an Address Verification (AVS).
Using AVS is easy to decrease the chances of accepting a stolen credit card. When you process a credit card transaction; make sure you get the card holder’s billing address and zip code. Manual non-swipe transactions will require you to get card holder information. However, card present transactions will not. Once you get the card holder’s billing address and zip code you’re ready to process the sale.

Be extra careful with International Orders.
It is very difficult to apprehend fraudsters or retrieve goods after they have left the country. Always inspection the orders that being shipped to an international address. Pay more attention if the card or the shipping address is in an area prone to credit card fraud.

Have any questions? Contact our in-house Chargeback Department at 1(866) 477-8088