You can do several things to reduce the number of chargebacks your business receives. Here are three essential tips:

1. Ensure that you only ship products to confirmed addresses
2. Keep detailed records of all customer interactions (they will come in handy if you ever need to dispute a chargeback claim).
3. Use fraud prevention measures like Address Verification Service (AVS) or Card Verification Value (CVV).

Most merchant accounts are set up so that your chargeback ratio does not exceed 0.9%. If you go over this limit, your account could be automatically terminated.

A chargeback threshold is a percentage (of transactions or overall revenue) that your customers might ‘charge back’ before the merchant account is red-flagged for closure.

Whenever a customer files a chargeback claim, they need to explain to their credit card company why they are doing so. These reasons are known as chargeback codes. There are four main chargeback codes: quality, clerical, technical, and fraud.

• Quality covers things like receiving substandard or faulty products. It also covers cases where the customer never received their purchased item.

• Clerical chargebacks include duplicate billings, over-excessive service charges, and non-issued refunds.

• Technical chargebacks may be filed if the customer doesn’t have enough credit remaining on their card for the purchase to go through or if there was a processing error during the transaction.

• Lastly, and most commonly, fraud chargebacks apply when someone else made a purchase using the customer’s card. As you can likely already guess, these chargebacks are the most common because they are very difficult to disprove. Quality chargebacks are also fairly common, although these are slightly easier to dispute in many cases.

There are multiple reasons why processors may classify businesses as high-risk. These include the following circumstances:

• You have a negative credit history.
• You offer recurring billing or a free trial.
• You sell high-ticket items.
• The industry you operate in has a high rate of fraud or chargebacks.

We currently work with US-based businesses and accept merchants that are classified as high, medium, or low-risk.

A high-risk merchant is a business that carries more risk for banks and payment processors. High-risk merchants have unique needs that are different from traditional or low-risk merchants. TailoredPay has the tools, resources, and expertise to provide high-quality payment processing services to high-risk merchants.

High-risk merchant accounts are payment processing accounts tailored to businesses classified as high-risk by traditional providers.

A merchant category code (MCC) is a four-digit number that is assigned to merchants. MCCs are defined in the ISO 18245 standard. The codes can be used for classifying merchants and transactions, tax reporting, tracking spending (e.g., points programs), and other payment processing workflows.