Disadvantages of Credit Card Processing

The benefits of credit card processing online usually outweigh the disadvantages. Unfortunately there are some pitfalls involved with credit card processing you should be aware of. The more knowledge you have going into a situation the more likely you are to come out of it ahead.

One of the biggest pitfalls associated with credit card processing is refunds or charge backs. Of these charge backs are potentially the most damaging. Most merchant account providers charge a hefty fee for any chargebacks they have to process. Some will close your account if you have too many so it is best you avoid them altogether.

There are ways you can reduce refunds or chargebacks. One you should make sure you have a clearly defined refund policy. You could for example limit the amount of time a customer has to request a refund. You should also ensure that your customers have a legitimate reason to ask for a refund. You can minimize refund requests by offering special bonuses to encourage better customer satisfaction.

Another way to limit chargebacks is by being open and up front about your business. If you use a third party processor for example to handle credit card payments you better let your customers know. Otherwise they may not recognize the third parties name when they receive their credit card statement and ask for a refund. This is an honest but also costly mistake.

You should also make sure you have adequate customer service which may help you iron out kinks with customers before a refund is requested. Good customer service goes a long way to preventing future problems with credit card processing.