Business Marketing Plan

Merchant Account Chargebacks: the Cost of Accepting Credit Cards

March 10, 2011

Merchant Accounts allow you the merchant to accept credit cards, debit cards, gift cards, electronic check, EBT cards, and other electronic payments. It is established that the acceptance of credit cards, you can increase your sales by 40-50%. After a merchant account is a necessity for any company credible. Although the acceptance of credit cards can boost your business, you must be aware of the costs associated with a merchant account. Such a price is a chargeback, a credit card processor will charge you the cost of credit to an account for a transaction. A chargeback occurs when your customer called the credit card company and disputed item on their bill. The bank that issued your credit card is required by law to solve the problem for the customer. Your credit card company or credit card issuing bank will then investigate the transaction. But because of high costs for further investigation, most disputes are resolved in favor of the customer. A chargeback can be initiated by a credit card issuing bank. These shifts do not require investigation by the bank and are the result of processing or approval of matters. Therefore, the costs and responsibilities associated with chargebacks transmit to the broker. The average cost of a reverse distributor exceeds $ 50. This percentage is higher than 0. 2% of total revenue. These figures are impressive and a burden for a company of any size. The total cost of chargebacks is to provide merchants a huge problem. As always it is up to the retailer, the solutions to develop procedures and strategies to help combat and reduce chargebacks and related costs.

Filed under: Credit Cards