How to Handle Chargebacks in 4 Steps

When in business and accepting credit cards, you must be prepared to handle chargebacks effectively when they occur without hurting your business. If you don’t, sooner or later, you will definitely feel their impact when they weigh on your business. You don’t have to rush the last minute while you can handle chargebacks before it is too late.

But how can you prevent your business from losing sale amount plus fees now and then? How can you make the chargeback process to work in your favor? Here is what you need to do to handle chargebacks effectively without tarnishing your business name.

But before diving deeper, let’s have a look at all those involved in the chargeback cycle. They include:

  • The cardholder
  • The acquirer
  • The gateway
  • The issuer (issuing bank)
  • The card schemes

4 steps to handling chargebacks professionally 


Step 1: Identify the source 

 The majority of chargebacks are a result of merchant error, friendly error, or criminal error. Understanding the actual source makes it possible for you to start working on an effective solution. You can use technologies like Chargebacks911 intelligence Source Detection to precisely know the root of your chargebacks. 

Don’t forget to take a keen look at the reason codes attached by cardholders when filing chargebacks. They can also help you identify the source of your chargebacks.

Step 2: Engage in tactical representment 

While it is not easy to dispute chargebacks resulting from criminal fraud and merchant error, you have a chance to fight those popping up due to friendly frauds. Once confident the source is actually friendly fraud, it is time to fight back. Here is why it worth fighting back immediately you detect the source is friendly fraud.

  • You recover revenue that would have otherwise been lost
  • You stop other cardholders from engaging in friendly fraud in the future. 
  • You improve your standing with banks. This triggers them to grant more due diligence when handling future disputes.

Making sure you have sufficient evidence to show that you upheld your end of the transaction is very crucial when engaging in tactical representment. You can use automated representment services to reverse friendly fraud or consult a human expert. We recommend talking to a human expert as automated services backfired often.

Step 3: Prevent future chargebacks

You may not be in a position to dispute current chargebacks, but it is possible to prevent similar occurrences from ever happening again. The first step to preventing future chargebacks is determining your unique needs. Doing this helps you use the right fraud filters. It is equally crucial also to review all merchant procedures, policies, and best practices. That way, you will know what you need to do that you have not been doing. You will also learn about the new trends that you have not implemented. 

Step 4: Get long-term, professional support 

Don’t be like average businesses that entirely rely on in-house management to handle chargebacks. While these teams do a recommendable job, they don’t outshine professionals in the payment industry who always have up-to-date information at their fingertips. Don’t forget that seeking professional support gives your team enough time to focus on other core pillars of your business growth. 

Other ways to resolve chargebacks


Contact the customer before contesting the chargeback

Some customers will be willing to settle the dispute without engaging the bank. If you find such a customer, go ahead and resolve the issue. If the customer agrees the charge was legitimate, request him to drop the chargeback and contact the bank. Equally, notify the credit card company that the customer agreed to drop the dispute.

Decide whether the challenge is worth it

Not all friendly chargebacks are worth contesting. Considering handling chargebacks requires more time, effort and reources, it is worth setting up a threshold to help you know which chargebacks to contest and which to ignore.  

Take them as a learning opportunity

To prevent future chargebacks, you must be prepared to learn from current happenings. That way, you will know where to improve, gaps that exist, and so on. If keen enough, you can prevent future chargebacks by simply learning from your past and current situations.