In the world of online and mobile payments, credit card fraud and chargebacks are a common concern among merchants. Business owners can protect themselves by understanding what chargebacks are, how the chargeback process works, and what measures can be taken to prevent them. Merchants can also avoid chargebacks by working with a PCI DSS Level 1 certified payment processing company, like 3G Direct Pay (http://www.3gdirectpay.com/)

3. EVERYTHING YOU NEED TO
KNOW ABOUT CHARGEBACKS
A GUIDE FOR BUSINESSES

4. ➢ A credit card company withdraws the money for a transaction from a
merchant‘s account and deposits it in a consumer’s, following a dispute
➢ Specifically, it is the reversal of a prior outbound transfer of funds from
a consumer’s bank account, line of credit, or credit card
WHAT IS A CHARGEBACK?

5. 7 CAUSES OF CHARGEBACKS
1. Fraudulent transactions: card used without the consent of the cardholder
2. Credit not processed: merchandise returned, but refund not issued
3. Goods not received: customer did not receive the item
4. Technical problems: issues between banks and merchants may lead to errors
5. Authorization not obtained: often a result of merchants forcing a transaction
6. Recurring transactions: subscriptions processed after a cardholder cancellation
7. Friendly fraud: dishonest buyers who reverse charges while keeping merchandise

6. NOT-SO-FRIENDLY FRAUD
86%
Global Risk Technologies (GRT) recently found that approximately 86% of
chargebacks are friendly-fraud, and many consumers bypass merchants to
directly file complaints with card-issuing banks.
Source: http://www.paymentscardsandmobile.com/86-of-fraud-in-chargebacks/

7. NOT-SO-FRIENDLY FRAUD
Merchants are paying $100 billion in fraud losses due to unauthorized
transactions, fees and interest associated with chargebacks - nearly ten
times the cost incurred by banks.
Source: http://hubpages.com/business/The-Impact-of-a-Chargeback-to-You-as-a-Merchant
COST TO MERCHANTS
COST TO BANKS

8. THE CHARGEBACK PROCESS
STEP 1:
Cardholder files a
complaint with the
issuing bank
STEP 2:
Issuing bank
investigates the
validity of the claim
STEP 3:
Issuing bank
provides a
provisional credit
and requests funds
from the acquiring
bank
STEP 4:
Acquiring bank
investigates and
declines the
chargeback or
requests information
from the merchant
STEP 5:
Merchant provides
needed documents,
bank applies relevant
rules. If the claim is
false, the cardholder
will be charged again
for the sale

9. WORRIED ABOUT CHARGEBACKS?
But don’t worry!
Chargebacks CAN be avoided…

10. HOW TO AVOID CHARGEBACKS
The Authorization Process
Obtain an authorization approval for every
transaction
Avoid using voice authorizations
Reauthorize anything more than seven days old

11. HOW TO AVOID CHARGEBACKS
Security Precautions
Verify card security codes
Exercise extra caution when the shipping
address is different from the billing address
Work with a secure PCI DSS certified payment
processor

12. HOW TO AVOID CHARGEBACKS
The Refund Process
Require customers to agree to your refund policy
Process refunds in a timely manner
Have a “no-questions-asked” refund and
cancellation policy

13. HOW TO AVOID CHARGEBACKS
The Authorization Process
Be reachable so customers can contact you with issues
instead of initiating chargebacks
Email customers confirmations with the details of
each transaction
Call, fax or email any large or suspicious orders to
ensure the order is legit
Do the final check -> confirm the customer’s identity
and get signatures on orders and receipts
Communication

14. www.3Gdirectpay.com
Jumuia Place, Block #1
Lenana Road
Nairobi, Kenya
+353 1 8764849
+44 20 35148393
CONTACT US – WE’RE GLAD TO HELP