Nowadays, credit cards are being accepted everywhere as a mode of payment for almost any kind of purchase, be it a flight ticket, or a hotel reservation in some remote tourist destination. An important aspect about credit card transaction that many people are not aware about is chargeback prevention.
In a normal credit card transaction, cardholder submits his/her credit card billing information at the Point-of-Sale terminal while making a purchase. These details are transferred to the acquiring bank that validates the transaction. Once the transaction is validated and accepted, the acquiring bank sends the information back to the merchant and the sale process gets completed. Meanwhile, acquiring bank sends the credit card information submitted by the cardholder to the card issuing bank on behalf of the merchant for clearance of funds. Issuing bank validates the transaction and deposits the funds with the acquiring bank. After deducting the charges, the net transaction amount is deposited into the merchant’s checking account. Chargeback happens when this process gets disrupted. Chargeback, as the term indicates, is a transaction where the amount credited or to be credited into your merchant account is reversed or held back. This usually happens when a cardholder challenges a particular transaction that has been made by him/her and submits a request to the card issuing bank not to clear the transaction amount. Subsequently, the transaction details submitted by the acquiring bank are sent back and further clarification is sought from the merchant. For this entire processing to happen, the bank charges the merchant certain fees known as chargeback.
Chargeback occurs due to variety of reasons. Some of these reasons include:
• If the customer feels that the quality of goods purchased is disputable or the amount charged on the credit card was not correct, he/she can stall the transaction.
• Chargeback might also occur when the customer feels that there were certain processing errors that have occurred at the time of transaction.
• Fraudulent credit cards might also be a reason for chargeback. Also, chargeback can happen when the cardholder stops the transactions due to malicious intentions.
• Chargeback can also happen if the authenticity of the cardholder is not established due to lack of proper authorization or when the merchant is unable to submit a retrieval request.
Apart from these, there are several other reasons due to which chargeback happen. Merchants willing to introduce credit card processing terminals at their outlets must compulsorily know about ways of chargeback prevention. Or else, merchant might either lose hundreds of dollars towards paying chargeback fees or get entangled in complicated customer disputes.
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looking forward for more information about this. thanks for sharing. Eugene
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