Payment Facilitators: A Painless Approach to Handle Chargebacks in Your Small Business

Bonnie D. Schmidt

If chargebacks are a pain in the neck, then perhaps you should consider a different approach. Payment facilitators (PF) or PayFacs are the retailers’ new favorite because they are an easy way to access merchant services without having to deal with the many parties involved in processing payments. In essence, […]

If chargebacks are a pain in the neck, then perhaps you should consider a different approach.

Payment facilitators (PF) or PayFacs are the retailers’ new favorite because they are an easy way to access merchant services without having to deal with the many parties involved in processing payments.

In essence, they create one mega merchant account that hosts many retailers. The PF overlooks all the payments, and works to straighten all payment processing problems— including chargebacks which is a sticking point among small business owners.

A chargeback is when a customer makes a payment, later disputes it, and convinces the issuing bank to reverse it. It is more like reversing a complete transaction.

A customer can request a reverse charge for a couple of reasons. For instance, a card owner might deny that they approved the payment, or they may file a claim when they aren’t impressed by an item or service, and the retailer won’t listen to their plea.

The consumer registers a complaint with their issuing bank, which then forwards it—through the linked card brand like Visa, MasterCard— to the acquirer or acquiring bank.

The acquirers look into the transaction, and its legitimacy of the claim by asking the retailer to show the necessary credentials.

In the end, the retailer should be liable for the sum of the transaction. The acquirer pays the amount if the merchant fails for whatever reason.

The Critical Role of PayFacs

A PayFac can make the chargeback process less painful for a retailer because they liaise with the acquiring bank and present all the supporting documents as requested.

Furthermore, a payment facilitator’s agreement with the acquiring bank holds them accountable—in case the acquirer isn’t able to get the money from the retailer.

Dealing with chargebacks is a PayFac’s priority because they risk losing a lot from reverse charges, so they are keen on documenting everything— which is an advantage to the merchant. They even go the extra mile to set risk & fraud control measures.

That also explains why they are reluctant to onboard businesses with high chargeback rates.

Closing Up

Though chargebacks is a problem you can’t wipe out completely, a payment facilitator can do much of the work that makes it tiresome. PayFacs are also keen on payments, which can reduce chargeback levels in your business. Working with the best facilitator for your business can lighten the workload for you!

Author Bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated chargeback insurance provider in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.

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