The Square chargeback protection program provides merchants with some protection from the consequences of chargebacks.
Square is a popular, low-cost, and user-friendly payment platform for buyers. At the same time, it benefits merchants. Even small businesses can accept credit card payments using a tablet or mobile device thanks to the payment platform.
However, any merchant who accepts credit cards will face customer complaints. Let’s take a look at the chargeback protection Square provides and how well it protects sellers.
- Learn How Square Chargeback Protection Works?
- What are the things included in Square Chargeback Protection?
- Where Does Square’s Chargeback Protection Fall Short?
- Frequently Asked Questions
What is a Square Chargeback?
A chargeback occurs when a customer has a problem with a transaction and contacts their bank to request a forced refund. Chargebacks are possible with square payments, just as they are with any other processor.
When a customer disputes a transaction, the bank will examine the evidence and then withdraw the funds from your account. They will also charge you a chargeback fee.
How Do Square Chargeback Protection Work?
Square chargebacks begin similarly to any other. When a cardholder believes there is reason to dispute a transaction, they contact their issuing bank and request that the charge be reversed. Square will be notified if the issuer initiates a chargeback.
If the merchant has enough money in their square account to cover the chargeback amount, Square will put a hold on it until the chargeback is resolved. If the merchant does not have enough funds, Square will deduct the disputed amount from their linked bank account.
The Disputes Resolution Team at Square will then contact the merchant to gather additional information about the transaction. If the issuer requests specific information, it will be forwarded to the merchant. In order to give Square, the best chance of fighting the chargeback, the merchant should provide thorough and detailed information in response to these inquiries.
Merchants can also choose to settle the dispute by refunding the customer’s money.
Square will request the same information you would provide for chargeback representation in most other situations: copies of receipts or invoices, emails between the merchant and the customer, proof of delivery, or the text of your purchase terms and conditions.
Square will only allow merchants to contest a chargeback if they submit the first representation. If the issuing bank rules in favor of the cardholder, Square will not file a second claim or seek arbitration.
What is Included in Square Chargeback Protection?
Square’s chargeback protection program appears to be quite effective at first glance. It includes fundamental fraud screening to assist merchants in preventing chargebacks in the first place, waives all chargeback fees, and compensates the merchant for eligible transaction revenue loss up to a certain amount.
As previously mentioned, Square also gives businesses a dashboard through which they can easily track their dispute activity and manages chargeback representation on the business’s behalf.
Where Does the Square’s Chargeback Protection Fall Short?
A few factors significantly reduce the effectiveness of Square’s chargeback protection program.
To begin, their revenue loss coverage is limited to $250 per month. That is more than most payment platforms provide, but for merchants who sell high-value goods or services, one or two chargebacks can quickly deplete it.
Let’s use an example where you receive two chargebacks in one month, one for $5 and the other for $250. Your remaining balance for that month would be $245 after Square has paid the $5 chargeback; the remaining $250 chargeback would not be paid in full.
The protection only applies to eligible products, which is another important restriction. Electronics and collectibles are examples of “high-risk” goods that do not qualify. To be eligible for chargeback reimbursement, businesses must follow Square’s best practices for accepting payments.
Does Square protect against chargebacks?
Square’s chargeback protection program protects merchants on up to $250 in eligible monthly sales. Square will also waive chargeback fees and cover the costs of eligible chargebacks at no cost to the merchant, subject to certain conditions. The products/services in question are protected.
How do you protect yourself from chargebacks?
Here are Ways to avoid chargebacks:
- Establish a clear return policy.
- Include your contact information, including an email address and phone number.
- Include comprehensive product descriptions on your website.
- Whenever possible, avoid keying in credit card numbers.
- For card-present transactions, always obtain a customer’s signature.
How often do merchants win chargeback disputes?
The average win rate for merchants who contest chargebacks, according to research, is 32 percent.
What are the valid reasons for a chargeback?
In truth, there are only three reasons why chargebacks are filed:
In reality, there are only three major causes for chargebacks:
- A merchant’s error: errors made by the merchant that unintentionally result in chargebacks
- The crime of fraud: intentional actions taken by third parties to steal from customers or business owners.
- Friendly Fraud.
Are purchases through Square protected?
Your payments are encrypted to keep hackers out. Square designed and maintained everything, so you don’t have to go through anyone else. Payments are secure right away, with no lengthy setup. All card-present transactions are encrypted from beginning to end.
You can learn more from the video below:
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