High-risk merchants are businesspeople that have a higher risk of receiving chargebacks than the average business.
Although a high-risk merchant can still receive a high-risk merchant account, he or she will have to pay higher rates for transactions than other merchants will have to pay. Furthermore, the high-risk business will still be subject to a significant number of chargebacks. A high-risk merchant should take the proper steps to improve their standing and handle chargeback disputes smoothly.
The first step in protecting a high-risk business from receiving chargebacks is taking the steps to deter consumers from initiating them. First, the paperwork regarding all sales must be complete and thorough. Merchants should always ask for identification before they sell a product or service to a customer who wants to pay via credit card. It is also important to make sure that the name on the credit card matches the name on the identification. A valid credit card purchase requires a signature from the cardholder. A merchant should make sure that every credit card transaction has a signature associated with it. Additionally, in a brick and mortar shop, the use of surveillance cameras is an excellent way to prove that a person makes a purchase. If the purchase comes up later in dispute, then the merchant can use the video footage to defend himself.
Sometimes, a consumer will initiate a dispute despite everything a high-risk merchant might do to avoid the situation. The first step in disputing a chargeback is trying to handle it on a consumer level. The merchant should attempt to speak with the customer first about the incident. In some cases, a dispute is nothing more than a misunderstanding between the two parties. However, parties that cannot resolve a consumer-level dispute must take matters further. The merchant will have to prove that the consumer did indeed purchase the product or service in question. Clear records are essential for this step, especially if the situation requires legal action down the line.
A high-risk merchant can dispute chargebacks by submitting the proof of purchase to the credit card company. Evidence of purchase can include any legal signatures, video recordings, identification copies and other records of a sale. A merchant that wins a dispute may still be subject to negative markings on his or her merchant account. Therefore, it is important that the merchant takes preventive measures before a customer initiates a chargeback.