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The following is a guest post by Elisabeth. Elisabeth is a regular correspondent for several blogs and sites, including Top 100 Promotional Products
As a small business owner in today’s fast paced world, you have to make sure that your business has the flexibility to accommodate the diverse demands of all your customers. Customers love options, and the more options that you make available to them, the better chance you have of creating a loyal customer base. Deciding what payment methods your business will accept is certainly a huge decision, which can have a dramatic impact on your sales.
One very important decision you will have to make is whether or not your small business will accept credit cards. Accepting credit cards will certainly make a lot of your customers happy, due to the ease and convenience that they provide. While accepting credit cards may appeal to your customers, there are some aspects of these kinds of transactions that make accepting this form of payment problematic. The remainder of this article will focus on what is arguably the most costly drawback of accepting credit cards at your small business: chargebacks.
Chargebacks: Beneficial for Customers but Detrimental for Business Owners
A chargeback happens when an issuing bank returns money to a customer in a forcible manner in order to settle a disputed transaction. Banks have instituted chargebacks to protect customers from dishonest merchants, but they do not have a whole lot to offer when it comes to protecting honest merchants from dishonest customers. This can be quite burdensome for many small business owners who are struggling to make their business a success.
Consumers love to use credit cards while shopping because of its ease of use. One way credit cards make it easy for their customers is by getting their money back if they are not satisfied with their purchase. This helps to assure customers that they are protected when shopping, especially online where fraud can be difficult to detect.
Protection plans don’t usually become a problem until consumers begin to abuse their privileges. Some consumers begin to shop recklessly with the belief that they should be able to return a product for any reason. If you deny them a refund, they can just file a complaint with their credit card company.
Small business owners should be aware that a buyer’s remorse many times leads to their requesting a chargeback. Each time a chargeback is issued against your merchant account, your bank will charge your business a fee, ranging anywhere from $15 to $25. As a small business, if you get enough of these fees then you probably won’t be in business for very long.
Customers generally don’t take into consideration that you are a small business, and they will treat your business in the same manner as they would treat any mass merchandiser. In order to help protect your business against chargebacks, be sure to have clear and concise refund or exchange policies in place. Terms of your returns policy should be in an easy to find location, such as on the back of your receipts.
You can read more about how to protect your business here.
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