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How to Reduce Your Risk of Authorization Related Chargebacks

If you’re a business that accepts credit card and debit card payments, avoiding chargebacks when processing payments can save you money. Chargebacks can be costly: You’re responsible for the chargeback, chargeback fees, and related costs. Fees and fines assessed by the Card Organization can range from $25 to $150 or more.

Authorization issues are a common cause of chargebacks, so avoiding authorization-related chargebacks can help control your costs. The following suggestions can help reduce your risk of authorization chargebacks, though they’re not a guarantee you’ll avoid chargebacks.

Tips for Avoiding Authorization-Related Chargebacks

  1. Obtain authorization on the day of the transaction. If merchandise is being shipped (which is common with Card Not Present transactions), you must obtain authorization within seven calendar days of the shipping date.
  2. If the authorization is declined, request an alternate form of payment from the customer.
  3. If you receive a Referral response, follow proper voice procedures to obtain a valid authorization. You’ll also need to obtain an imprint of the card.
  4. If you receive a “Pick-up” response, the card Issuer is asking for the card to be retained and returned to them. Do not accept the card should for payment. You can choose to retain the credit card and return it to the Acquirer.

Authorization chargebacks typically occur when proper authorization procedures aren’t followed or when you fail to obtain valid authorization. Remember, both the cardholder and the card issuer have the right to challenge a transaction, so following proper authorization procedures can reduce your risk of chargebacks for unauthorized transactions.

Welcome to the BluePay Blog!

Whether you're a small business, an enterprise corporation, a financial institution, or a software partner, we have created a series of blog posts to help you and your customers, learn more about the complex nature of payments. Take a look to learn how payments can help to simplify your business operation, and may even help to grow your revenue.

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