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Why you need to record all chargebacks

Chargebacks, whether they're due to fraudulent card use or faulty services, are a necessary hassle for all companies utilizing the online subscription business model. If not managed correctly, they can wreak havoc with your subscription billing system. When a chargeback occurs, it's important to update your subscription payment systems and ensure that all data pertaining to the transaction was chronicled appropriately. Here are a few reasons why proper records are important:

Chargeback data informs future business decisions
Your business needs to utilize customer data before moving forward. Information attained from chargebacks can help your subscription business identify mistakes in your current strategy. It's not enough to simply respond to chargebacks. Your subscription business needs to use the wealth of knowledge that can be gained through this information to understand how fraud affects your business or why customers are dissatisfied with your products.

Chargebacks notify you of discrepancies and errors
When you keep detailed records of all chargebacks, you're essentially providing yourself with a way to manage any suspicious activity that appears in your monthly statements. If you notice something isn't right, you need the ability to sort back through all transactions and identify when a chargeback occurred and why.

As soon as an issue is identified, you need to contact your subscription payment processor. They should be able to explain the subscription billing situation to you and determine the necessary steps to keep further discrepancies from occurring.

In general, it is smart to discuss your monthly statements with your payment processor just to help build a strong working relationship. Consistent interaction with your processor will help once there is a real issue at hand.

Proper records allow you to make a case to keep the money
According to CreditCards.com, when a customer notifies his or her bank of a chargeback, it will reach out to the merchant with a request for all data you have on the transaction. John Monarch, CEO of Direct Outbound, a chargeback call center dispute firm, said that companies will be better off if they provide this information in a timely manner.

"The best plan of attack, if [the chargeback] is already filed, is to simply gather as much data as possible, write up a detailed document regarding how one purchases your product or service and submit all of this to the acquiring bank, which will have mailed or faxed you a chargeback letter," Monarch told CreditCards.com.

If your company can present a good case, the money may not go back to the persons account, and it will stay with your business. When this happens - such is the case when fraudulent activity occurs - the bank deals with righting what's wrong.

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