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WHAT IS A CHARGEBACK?
AN INTRO FOR EVERY SMALL BUSINESS OWNER WHO ACCEPTS CREDIT CARD PAYMENTS
© 2017. Equilibria, Inc.
FLUSHING MONEY DOWN THE DRAIN
© 2017. Equilibria, Inc.
CHARGEBACKS ARE LIKE… 2
the charge a credit card merchant pays to a customer after the customer successfully
disputes an item on his or her credit card statement . ~Investopedia.com
A CHARGEBACK IS…
”“
© 2017. Equilibria, Inc.
3
If one of your customers successfully disputes a charge from your
company, the credit card processor will not only require you to
credit or charge back the disputed amount to the customer’s
account, but will also charge you an additional penalty.
© 2017. Equilibria, Inc.
4IN OTHER WORDS…
Merchant & Processor Relationship -
How it Works
+
© 2017. Equilibria, Inc.
5
When you accept credit cards, you
are known as the merchant.
You have options for how you
accept credit cards. Both options
require entering into a contract with
a credit card processor where you
will pay either a flat fee or % of each
sale to process a payment.
DIRECT OPTION
INDIRECT OPTION
If too many of your customers request
chargebacks, the processor can actually
freeze your account and end your contract.
© 2017. Equilibria, Inc.
6
THE FOLLOWING IS BASED ON A TRUE STORY
The events described on the next few slides took place in Atlanta, GA USA in 2006.
Names have been changed to protect the business owner’s identity.
© 2017. Equilibria, Inc.
7TRUE
CHARGEBACK
STORY
Meet Sam Milton. He
worked hard to build his
online business, Stuff, Inc.
After a successful launch, he
knew he needed to prepare
for the avalanche of business
sure to come over the holiday
season.
© 2017. Equilibria, Inc.
8TRUE
CHARGEBACK
STORY
Sam’s preparation
included:
Hiring more staff
Negotiating shipping
and delivery costs
Website testing
Pricing items
© 2017. Equilibria, Inc.
9TRUE
CHARGEBACK
STORY
Sam gained his e-commerce
knowledge by being a vendor
on Etsy.com.
The experience taught him that
the Nov. – Dec. timeframe
accounted for 75% of his
annual sales!
© 2017. Equilibria, Inc.
10TRUE
CHARGEBACK
STORY
SEPT OCT NOV DEC
But there was one thing Sam forgot.
When customers purchased
products, the vendor name cited on
their credit card statements was
Sam Milton, and not Stuff, Inc.
© 2017. Equilibria, Inc.
11TRUE
CHARGEBACK
STORY
Confused, many customers called
PayPal to report fraudulent activity.
Because the number of people
disputing charges in a short period
was so high, his bank froze his
account.
Sam lost all of those sales and not
only had to return the money but also
pay additional fines.
Unable to recover financially, Sam
shut down his online store.
© 2017. Equilibria, Inc.
12TRUE
CHARGEBACK
STORY
In Sam’s case, the one thing he did not have in place
once he launched his online store were processes.
Specifically, processes for handling product returns
and chargebacks. © 2017. Equilibria, Inc.
13BUT THERE’S HOPE…
Maximize Profit from Every Sale
Processes are just one of the things Sam needed to prevent chargebacks.
Gain more insights from Sam’s mistakes and avoid costly chargebacks with our additional tips.
© 2017. Equilibria, Inc.
Yes, I Want Free Tips to Protect
My Business from Chargebacks
14
Thank You!
© 2017. Equilibria, Inc.
Alicia Butler Pierre
Founder & CEO
Equilibria, Inc.
15
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