The best way to avoid chargebacks is prevention—preferably at the time of the transaction. Here are some tips:
Always process chip cards as chip transactions
Swipe non-chip cards through the terminal
If a card is declined, ask for another form of payment—do not re-swipe or override
Match the last four numbers on the slip
Request/verify the signature
For keyed/manual entry transactions, check the expiration date and make an imprint
While it’s rare, cards can be inactive. Your processor can check with the issuer to determine if a card has been closed. Your processor also should be validating if disputes are, in fact, fraud. Here is a deeper dive into more ways you can avoid card disputes.
EMV Liability Shift—Chip Cards and Chargebacks
Since October 2015, merchants without an EMV-compatible terminal or POS system are responsible for chargebacks and fraudulent card acceptance. It’s important to note this only applies when an EMV card is presented at the POS. Although the shift happened months ago, you may still be wondering about a few things—the reason for the liability shift or how fraud is still occurring if EMV is so secure. It’s nearly impossible for a fraudster to copy the EMV chip, but easy for them to copy the information from the magnetic stripe that still exists on all cards—new and old.
The problem? If a merchant doesn’t have an EMV terminal, there’s no way to detect if they’re accepting what should be an EMV card. EMV-enabled terminals will signal that the card should be dipped instead of swiped. At that point, if the card doesn’t have a chip, it’s considered fraudulent.
This is an important side note because smart criminals will avoid businesses with upgraded equipment. Merchants still using the old magnetic stripe terminals are at higher risk for chargebacks. For more information on the EMV liability shift, visit our EMV resource page.
Here are some ways to decrease your chance of fraud:
To avoid chargebacks on chip cards, upgrade to an EMV-enabled terminal
When processing a chip card, follow the instructions on the terminal
Remember that you’re not protected if a chip card is swiped or keyed in
If you haven’t upgraded to EMV, check out these best practices on the link below.