By Karisse Hendrick, Editor-at-Large,

Preventing Chargebacks: The Best Defense is a Good Offense For card-not-present merchants, chargebacks are persistent, often frustrating and costly. While the issuing bank is the party responsible for repaying the cardholder in most card-present chargebacks, the merchant bears that responsibility for CNP transactions. Also, because there is a lag between the transactions and when consumers actually receive their purchase, CNP merchants tend to rack up more service-related chargebacks. While card brands tolerate chargebacks up to 1 percent of sales , for many businesses, that 1 percent amounts to high dollar losses.

Merchants can reduce this loss by responding to chargebacks as they are received. Because not all chargebacks can be reversed, however, it is equally important to devise a strategy that reduces the volume of chargebacks issued to your company.

“Chargeback data can lead merchants to the specific steps necessary to reduce their chargebacks,” says Lisa Tennant, vice president of Business Operations at Verifi. “Analyzing chargeback details to identify common trends and locate gaps in their order acceptance and verification processes provides the best insight into where improvements should be made.”

Additional benefits of preventing chargebacks include: