Chargebacks with no help from Square

[TheConnect]

I have been using square for about 5 years now and this chargeback issue has always been a problem that Square seems to push off on us the deal with. In the last 2 months I have had over $1500 with of chargebacks and lost each one. I follow all the steps I am supposed to like matching billing and shipping for online orders or matching photo ID to their credit card but I still get chargebacks. I have suggested Square requiring a pin number to be put in when purchasing with card but the tech team just tells me to put in a request and that doesn't go anywhere. I am posting this on here to hopefully get some tips or bring enough attention to this issue so Square can implement the pin code required for card. 

[TheRealChipA]

Hi @TheConnect.  First or all, I want to say that I definitely agree with you about a PIN requirement.  The EU countries have chip-and-PIN verification and while fraud is still a problem it is not as much of a problem.  It doesn’t help that in this country PINs must be allowed to be bypassed so that the truly clueless consumers among us aren’t inconvenienced.  It’s part of living in a country that, frankly, just doesn’t care about the small businessman and so doesn’t allow such protections to be put in place.

Honestly, Square implementing PIN protocols would not completely solve your problem because people, being people, will still contest charges they know they made because they also know that the card issuers (MC, Visa…) will always side with them against us.  Square must abide by the decision of these issuers and the customers’ banks, and all Square can do is submit our documentation for review.  By and large, Square does not play any part in determining the outcome of chargebacks.  They are just the “bearer of bad news” because of the way our stupid system is set up here in our country.  Ugh.

Anyway, you didn’t ask for a sermon you’ve probably already heard, eh?  LOL

Are your chargebacks mostly with online sales, rather than in-person sales?  Because, if so, Square has a thing called Risk Manager that you can set up to apply different verification rules, as well as set up rules that will cause Square to flag suspect transactions for you to review and either approve or deny.  Here is a link to the various Square Help Documents on Risk Manager.  I’d recommend checking this out because if you set it up properly, it will help reduce your online fraud greatly.  

Let me know if I, as a fellow seller, can be of any more help to assist you in starting now to reduce your fraud and chargebacks.

[TheConnect]

The chargebacks are split between online and in store but at least the in store would help stop stolen cards and possible give me a better chance at winning the case if they had to put the pin in. I have set up risk manager this month and after that I saw a increase in chargebacks which I find funny. It stops some of the stolen cards being used but it cant stop someone that made the purchase claim they didnt. I also find it annoying that if its a fraud purchase and I refund them Square still keeps that fee even though it wasnt an actual purchase that would of went smoothly. I thank you for the input and help!

[TheRealChipA]

A couple of things.  I’m going to tag a few Community moderators here, but…. I believe that if a chargeback goes against us, that the Square refunds the fees since that was totally out of our control.  But @Summer2024 @_Violet @JJ_  will correct me if I am wrong with this statement.

The fact that you saw an increase in chargebacks after first setting up Risk Manager is not a surprise, necessarily.  You’d have to go back and see when the contested transactions actually happened — before OR after the date that you set up Risk Manager.  Of course, you rightly point out that Risk Manager can’t account for people who have valid cards that they use and who intended to scam you to begin with.  Unfortunately, that is one of the issues of having online sales without chip-and-pin verification, and Square can’t implement that until it is actually adopted nationwide either by agreement among the card issuers OR by a new law that actually mandates that.  So far, the card issuers (who have the most money in this game) are lobbying Congress hard to never do that.  As we all know, in this corrupt version of capitalism that we have here in the USA, those with the most money make the rules.  The rest of us are stuck with either taking our chances or stopping our online sales.  

One last thing.  I’d caution against the belief that Square implementing debit card PINs (because they can’t implement credit card PINs at all, yet) will help much.  In the US, most all debit cards have the option of bypassing the PIN all together by pressing the cancel (or equivalent) key, which causes the banks to process it as if it were a credit card even though it really acts like a debit card.  That is one of the dumbest loopholes that capitalism ever created, and I believe that ours is one of the few countries with such a stupid loophole.  Sure, Square could put in the PIN and add a PIN pad to our readers somehow.  But, they would not be able to get around this loophole, for now.

I’m not trying to minimize your pain, trust me.  But I am trying to help set expectations about the real value of a PIN pad and PIN input.  For us, that value is pretty minimal given current laws.