Know Your Speed Before You Get A Ticket

Don Apgar, Lead Product Manager, Card Payments & Merchant Acquiring

September 26, 2023

3 min read

One of the driving forces behind the phenomenal growth of the Visa and Mastercard card brands has been their unwavering focus on delivering the best customer experience for their cardholders. Merchants who are enabled to accept these branded payment cards are reviewed by acquirers to weed out unscrupulous, unethical, and unstable businesses. Even after merchants are connected to the interbank system, they are monitored closely to protect the brand equity networks have generated through their advertising investments throughout the decades. One way the networks protect their brands is by ensuring merchants do not generate excessive cardholder disputes, which in the case of Visa and Mastercard is defined as more than 1% of card sales. 

Chargeback Protocols and 99% customer satisfaction 

While holding businesses to a 99% customer satisfaction standard is a very high bar, it's important to note that most card-accepting merchants not only meet but exceed these expectations.    

Those that do not are quickly identified, and can be subject to stiff fines, penalties, or sanctions up to and including the revocation of their ability to accept Visa and Mastercard cards. Unfortunately, most merchants aren’t aware of this critical limit on disputes and moreover, many aren’t even aware that they were being monitored and held to this high standard of customer satisfaction. 

Our team works hard to be sure that we notify our merchants as they are approaching the threshold, not after they have exceeded it. We’ve all seen the “Your Speed” signs on our local roads that give you a chance to slow down before you face the penalties of a speeding ticket. Cross River chargeback monitoring works the same way: it gives the merchant a chance to fix the problem – before it becomes a problem. 

Below are some business practices proven to directly lower cardholder dispute rates.  

Communicate clearly with customers: 

  • Provide clear product descriptions, terms of service, shipping timelines, and return policies to customers during the purchase process. 

  • Be sure that the billing descriptor you are using for card sales is accurate and easily recognized. 

  • Make sure customers know what to expect in terms of products, services, and billing. 

  • Send customers order confirmation emails with details of the transaction, including the purchased items, billing amount, and contact information for inquiries. 

 Focus on customer service: 

  • Provide responsive customer service to address customer concerns and inquiries promptly. Make it easy for customers to reach out to your support team through various channels (phone, email, chat).  

  • Clearly outline your refund and return policies on your website and make the process of requesting a refund or return as simple as possible. 

  • Simplify the checkout process to reduce the chances of customer errors that could lead to disputes and provide clear instructions and minimize any confusion during the purchase process. 

 Integrate anti-fraud measures: 

  • Use fraud detection tools and systems like AVS (Address Verification System) and CVV (Card Verification Value) to verify customer information.  

  • Identify potentially fraudulent transactions. 

  • Consider 3rd party tools that go deeper and look for other fraud indicators and patterns. 

 Continue monitoring and analysis: 

  • Gather and analyze customer feedback to identify recurring issues that might lead to chargebacks. 

  • Regularly monitor chargeback ratios and reasons for chargebacks to identify trends and potential problems. 

  • Adjust your strategies based on this analysis to address recurring issues.

Provide education and training: 

  • Train your employees to handle customer interactions effectively and resolve disputes before they escalate to chargebacks. 

  • Keep your employees and customers informed about your company's policies and procedures. 

Now is the time to check and make sure that there are no warning signs blinking. Remember, once a penalty is incurred, a written remediation plan addressing all of these areas along with other due diligence tasks will be required by card networks to regain privileges.  

While there may not be a one size fits all solution to achieve a “no or low chargebacks” status, understanding why each merchant produces chargebacks can help cultivate customized solutions to enhance protective measures for cardholders and the end-user.  

Have more questions? Learn more about our cards program.