With every card payment you take, you and your customer are entering into an agreement. This means that you can be held liable for the amount of the payment if a chargeback or dispute related to the transaction were to occur.

By following these guidelines, you may be able to reduce the likelihood of receiving a chargeback and you’ll be more prepared if you do receive one.

EMV Liability Shift

A liability shift related chargeback can happen if a fraudulent chip card is processed manually or as a magstripe transaction through a magstripe reader, instead of being processed through a chip card (EMV) payment terminal.

To protect your business for in-person transactions, make sure you can accept chip cards with the Square contactless and chip card reader.

If your customer isn’t physically present, send an invoice or enter their card information manually with Virtual Terminal from your online Square Dashboard.

Best Practices for Keyed-In Payments

Keyed-in payments are inherently riskier because the customer does not have to be physically present. Fortunately, there are some simple precautions that you can take to guard against disputes. 

Request Card Information

Make sure a customer can provide the name on the card, the billing address, card number, expiration date and the CVV code on the back of the card.

Obtain a Signature

If you are processing a large transaction, have your customer sign an invoice, a credit card authorization form or a contract that authorizes the payment and outlines your refund policies. Once signed, make sure to keep them on file. If the customer isn’t present for the sale, be sure to write why on the signature screen, for example, write “phone auth” or “Internet order.”

Delivery Confirmation

If you are shipping a product, make sure to keep the tracking information and a delivery receipt. For large orders, require a signature confirmation at delivery.

Proof of Service

If you provide a service, document the service was successfully provided. For example: Create a work order for your customer to review and sign for your records.

Know Your Customer

Get to know your customer before processing a large transaction. Verify your customer’s identity, billing address, and business if applicable. Do a Google search or ask for a government-issued ID. We recommend matching the name on the ID to the name on the payment card. These precautions are highly recommended for invoice payments.

Match Billing and Shipping Postal Codes

If you are shipping an item, check whether the billing and shipping postal codes match. If they don’t match, ask your customer why. Their answer should make practical sense. If it doesn’t, do not accept the payment. If you have any questions about accepting a payment, always feel free to contact us.

Tips for Processing Payments

If you’re processing multiple transactions for the same customer over a period of time, obtain a signature for each individual payment. In the item description clarify that the payment is an “installment payment.”

If you have a recurring charge with a client, acquire written cardholder permission to periodically charge for the recurring services or goods. On the written agreement make sure to include:

  • transaction amounts
  • frequency of the charges
  • the duration for which cardholder permission is granted
  • the cardholder’s signature

If you wish to refund a customer for a payment, always issue the refund directly back to the payment card. If you must provide a refund via cash, check or money order, make sure to obtain a signed agreement that your customer received the refund.

Never have your customer sign a statement waiving their right to dispute the transaction with the card issuer. This is a network violation and will impact your chances of winning a payment dispute if one occurs. Instead, follow the guidelines in this article to help put you and your customer on the same page regarding expectations for the completion of the transaction. 

Make Your Receipt Information Recognizable

Add your contact information

Add your phone number, address, website and social media pages to your receipts. This may help a customer reach out to you directly if something were to go wrong with a sale, rather than file a dispute with their bank.

Publish a refund policy

Add a refund or cancellation policy to your receipts

Make your business name recognizable

Make sure the business name on your receipt is recognizable. This is the name that shows up on a customer’s bank statements. If a customer does not recall a name on their statement, they may be more inclined to file a dispute.

If you do not have a business name or your business name is longer than 35 characters, add a description of what you sell and your location to your business name.

Write a description of the goods or services you sold

Provide an accurate description of what you sold for every transaction. This can help jog a customer’s memory and prevent a dispute from happening.

If it is too much to write a description for each sale, create an item library. Then, when you process a sale, simply select the items or services sold and they’ll be added to the receipt.

Best Practices for Process Card-Present Transactions

Always Swipe Cards

If the payment card is available, always swipe the card through the reader. A dispute on a swiped and signed payment has a higher chance of winning than if the card information has been keyed in.

Have Customers Sign on the Signature Screen

Obtain a signature for every swiped transaction. When you do so, make sure the signature on the screen matches the signature on the back of the payment card. If the card is not signed, ask your customer for a government-issued ID and to sign the card. Then match the signature on the government ID to the signature on the payment card. While you can’t require your customer to provide an ID, and requesting an ID doesn’t change your liability for chargebacks, unsigned cards are invalid and should not be accepted.

Always Provide a Receipt

A receipt is a record of the transaction for both you and your customer. A receipt can help a buyer recall what a charge was for, and in the event of a dispute, can help you represent yourself.

Large Transactions

All Square merchants have a per transaction limit of $50,000.

If you would like to accept individual transactions above $50,000 each, you’ll need to split the payment into multiple installments. Make sure to record the receipt number and the total amount charged for each installment. Please note that in order to ensure a secure purchasing environment, we may periodically reach out to customers for additional information regarding their business or transactions.  

Note: Merchants who process more than $100,000 annually will be asked to sign a Commercial Entity Agreement, acknowledging that the payments processed are associated with a commercial business.

Learn more about best practices for protecting yourself from scams and fraud.

Chargeback Support

Although following these guidelines will reduce your chances of receiving a chargeback, there is always a potential risk associated with accepting credit card payments. If a customer does dispute a payment, Square will represent you in the dispute process free of charge and our team of specialists will use their expertise to help you along the way.

Learn more about the dispute process and how we work with you to build a case.