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Post-holiday checklist for small businesses: find out how to dispute chargebacks and more

Thursday, January 05, 2023

The beginning of the year offers the perfect opportunity for businesses of all shapes and sizes to adjust after the holidays and make sure everything continues to run smoothly in the coming months. But what’s the best way to get started?

We’ve determined five important areas worth reviewing at this time of year. Read on to learn:

Tackle chargebacks

A chargeback, also called a disputed charge, is defined as a reversal of funds after a customer has issued a dispute on a credit or debit card transaction with their bank. January is consistently the month of the year that sees the most chargebacks, largely due to the preceding holiday shopping season. And with the increase in online shopping during the 2022 holidays, businesses are even more likely to see an increase in chargebacks this month.

The chargeback process can deliver serious blows to your bottom line in the form of chargeback fees. And unfortunately, these fees can apply regardless of whether you win the arbitration process. To start, retrieval request fees generally range from $5 to $20 a pop. Additional chargeback fees vary per payment processor, ranging from $20 to $100 per incident. Plus, the major card brands have strict limits — generally 1% of sales volume — that can trigger additional fines or even account termination.

In the end, the fees and handling costs of a chargeback can make your actual loss 20-30% greater than the value of the transaction.

Common chargeback reasons

There are several scenarios where credit card disputes happen, but two major themes emerge:

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Fraud: First, there’s criminal fraud, where scammers steal the cardholder’s identity. In this case, customers have a valid reason for a chargeback and you shouldn’t attempt to dispute. Then, there’s “friendly fraud” — the transaction amount is valid, but the customer claims fraud due to buyer’s remorse or simply to get free items. During the dispute process, they may argue that they didn’t authorize the transaction.

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Business error: On the other hand, there may be flaws in your operations that could lead to a disputed charge. Accepting cards that are expired or stolen, or failing to follow proper card verification procedures can make you liable for chargebacks.

Ways you can prevent chargebacks

Here are a few steps you can take to help prevent chargebacks — and if you haven’t done so already, the first of the year is a great time to get started.

  • Use a payment processor with a robust suite of data security features such as encryption and tokenization that can help defend against fraudulent charges.

  • Train your staff on the do’s and don’ts of accepting credit cards to minimize disputed transactions.

  • Be upfront with your customers — clearly communicate about pricing, your return policy and your refund policy.

  • Shipping your products straight to customers? Provide proof of delivery so that they can’t claim their purchase never arrived.

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Improve cash flow

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Typically, the start of the year is less busy, so it’s the perfect time to take a look at your management practices. And now that you know what it takes to reduce the number of chargebacks, let’s talk about cash flow. After all, poor cash flow management is the cause of small business failures 82% of the time.

One area where you can potentially improve cash flow is by digitizing B2B payments and leaving paper checks in the past. Research found that processing a paper check can cost anywhere from $4 to $20 and is on average 10 times more expensive than digital payment solutions. With digital B2B payments, you’ll no longer need to buy checks, envelopes and stamps — and that’s not even taking into account the time savings.

Digital B2B payments give your business the power of automation, which allows for faster payment processing, more working capital and increased cash flow. With better cost-effectiveness and faster cycle times, you’re looking at as much as 80% greater efficiency for your business.

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Manage online reviews

The importance of online reviews can’t be overstated. Research shows that almost 95% of consumers read online reviews before making a purchase. Further, 88% of consumers trust online reviews as much as personal recommendations.

With the increase in sales during the recent holiday season, you might now find yourself with an influx of reviews. It’s important to stay on top of these — both positive and negative — and respond accordingly. If a customer gave you five stars, go out of your way to thank them. And if they shared a complaint, take the time to respectfully address their concerns and publicly apologize if needed. Online complaints that go unanswered can generate distrust with consumers, and when a business tries to make things right, 89% of consumers are willing to change a review.

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If your business has the opposite problem — you aren’t aren’t receiving enough online reviews — one way to rectify that is to simply ask your customers. Statistics show that 77% of consumers would be willing to leave a review if asked.

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Make website and SEO updates

With consumers conducting so much of their research into products and companies online, good search engine optimization (SEO) is an essential online marketing tool for small businesses.

SEO is a combination of techniques and strategies designed to drive traffic to a website by increasing its ranking on the search results page of a search engine such as Google, Bing or Yahoo.

Updated content is a major ranking factor for SEO, so take the time this month to make sure any new products or services are included on your website. If you’re an ecommerce business owner, the post-holiday period is also a great time to verify product inventory is up to date on your site.

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Ensure PCI compliance and security

Not familiar with PCI compliance, or maybe need a refresher? The beginning of the year is an ideal time to be certain your business is in line with the current guidelines set by the Payment Card Industry Data Security Standard (PCI-DSS).

The PCI-DSS is administered by the Payment Card Industry Security Standards Council, or PCI SSC, which was developed by the five major card networks — Visa, Mastercard, American Express, Discover and JCB International. It establishes the minimum payment security features that must be in place to support consumer protection and prevent the chances of a cardholder data breach.

All businesses that store, process, or transmit cardholder data must ensure PCI compliance — those that do are less likely to suffer data breaches, and their customers are less likely to be victims of credit card fraud and unauthorized charges. Those that don’t comply? They’re often dealt hefty fines from their issuing bank or processor — and their credit card company can even terminate their merchant account, denying them the ability to accept credit cards.

If you feel like you might need some guidance with PCI compliance, a service provider can help. The right solution can even help you maintain compliance in real time — alerting you to any requirements you may need to address as they come up.

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Start the year off right

Now that the holidays have ended, this time of year offers a great opportunity to reflect — in what ways could your business be doing better? Are you set up for success in the year ahead? By focusing on just a few areas — like customer disputes, online reviews, website updates and more — you can clear the way for your business to have its best year yet.


Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us