Many of today's shoppers prefer to use credit cards when paying for purchases due to their flexibility and convenience. One of the biggest downsides of setting up your business with a merchant account and conducting credit card processing are chargebacks. Chargebacks occur pretty frequently in the small-business world as double-charging, credit card expiration, bank errors and cancellations affect small businesses everyday across the world. For those unfamiliar with chargebacks, they occur when a sales transaction is reversed and the customer is refunded his/her money. As a result, instead of receiving payment from the customer, the total amount of the order is deducted from the business's merchant account.

When conducting business over the internet, there is always the very real risk of your business being targeted by fraud and identity thieves. You can very easily reduce and even eliminate fraud related chargebacks by regularly using an address verification product or service. Also, besides losing revenue, your business could lose its merchant account if issued too many chargebacks. Additionally, if your business receives a strange or suspicious order, immediately follow up with the customer. Be sure to take extra precautions when dealing with customers from developing countries as that is where most internet fraud is perpetrated.

Because of the hefty risks involved, there are high costs and fees associated setting up and maintaining a merchant account. However, the improvement in added convenience and flexibility for your customers and likely increase in revenue will make it worthwhile investment.