3 Techniques for Credit Rehabilitation Services to Control Chargebacks | Soar Payments LLC
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3 Techniques for Credit Rehabilitation Services to Control Chargebacks


Running a small business is hard, especially if your business is a credit rehabilitation service. Managing customers who are often disorganized and at times even hostile, and employees (sad to say same goes for them) is difficult enough without adding the stress of managing your credit payment processor or worse, getting shut down. Too many chargebacks will result in the termination of the processing agreement and result in lost revenue.

Chargebacks for Credit Repair Services: An Overview

Chargebacks are an easy enough concept to understand. Anytime a customer disputes a charge to their bank or credit card provider, a refund is immediately and temporarily issued by their credit card issuer and the merchant’s account is debited. Then an arbitration process takes place, which ultimately decides whether the customer or the merchant was in the right. This is called a chargeback, and credit processing companies view too many as a sign of a fraudulent or a high risk merchant that cannot be supported. Therefore, it is in the best interest of any merchant to minimize chargebacks as much as possible.

Merchant payment processors that focus on high risk clients tend to offer a variety of services for limiting chargebacks. Below are a few of the more effective services available to high risk merchants that are proven to limit chargebacks.

1. Transaction Filters

A company’s payment gateway can do a lot for a high risk merchant to limit fraudulent transactions that often result in chargebacks. A transaction filter is a lot like what it sounds like, a set of electronic controls that monitor transactions for signs of fraud and block or flag transactions that look suspicious.

Specifically, a payment gateway fraud filter may use the following features:

  • CVV Match: Requires that the customer enters their three digit code on the back of the credit card and that it matches the digits on file.
  • AVS Match: Requires that the customer enter part of their address, and that it matches the credit card file.
  • IP Match: Checks the IP address that the customer is using and ensures that it matches the expected country.
  • Flag Outsized Transactions: Monitors the sizes of transactions and flags any large transactions for manual review, as these can be signs of potential fraud.
  • Flag High Frequency Transactions: Monitors the speed or the number of times a credit card is used in a payment gateway to look for signs of fraud.

The cost of employing a transaction filter on your payment gateway is generally only a few cents per transaction. A payment gateway fraud filter is customizable to the specific needs of a business and owners have a few options for how to handle their specific transactions.

2. Chargeback Alerts

A company’s chargeback to transaction ratio (CTR) is vital to protecting their relationship with a payments processor. If a business has more than 50,000 transactions per month and more than 50 chargebacks for every 1,000 transactions, they are qualified as a chargeback monitored merchant (CMM). This designation can cause a business substantial frustration, increased costs, and can even lead to termination of a payment processing agreement. For smaller businesses, excessive chargebacks that increase their ratio can cause equal problems and potentially the termination of their merchant account.

Chargeback alerts help prevent this by giving business owners 72 hours to issue a refund, thus preventing a reported chargeback. For many businesses, these alerts can decrease reported chargebacks by as much as 20 to 30 percent. A unique version of chargeback alerts offered by Soar Payments partner providers which even lets business owners declare their own set of rules for automatically issuing refunds.

3. Fraud Management Alerts

Fraud is a major concern for any business but it is especially problematic for high risk merchants. Scammers often prey on smaller and high risk businesses, making credit processing extremely difficult for these operations. Fraud filter software and alerts help businesses mitigate this risk by monitoring for suspicious activity and blocking suspicious transactions. As a general rule, merchants with goods valued at $15 or more need to scrutinize transactions, looking for things like, stolen credit card numbers or identity theft. Quality fraud management software can automatically filter or block suspicious activity based on rules inputted by the merchant.

About Soar Payments

Soar Payments has been rated the #1 High-Risk Processor for 2015 and 2016. In addition to providing credit card processing and ACH check processing to high risk merchants through its partners, Soar Payments provides a number of integrated ancillary services such as chargeback protection, and a high risk payment gateway. To sign up to become a Soar Payments merchant, complete the online application.