Chargebacks have become an annoyance for those who run online businesses. Enabling digital payment methods is undoubtedly one of the most acceptable ways to increase sales and get more profit.
Nowadays, most businesses have high-risk credit card processing, which leads to greater chances of chargebacks. Therefore, merchants need to find the most innovative ways to deal with chargebacks. The main reason behind the establishment of chargebacks is customer protection. But the higher amount of chargebacks can cause damage to the business.
In this article, we have listed some of the top-notch ways to help you in reducing chargebacks. Go through the article, and find your preferred mode of dealing with chargebacks.
What Is Chargeback?
Chargebacks are also called reversal of credit card transactions. These can happen when a customer is having a dispute with a charge. Sometimes customers are not satisfied with the purchased product, and they need a refund. In case the merchant fails to provide the rebate, the customers can file the chargeback claim with the issuer of their credit cards.
Also, when a customer sees an unknown charge on their account, they can opt for a chargeback.
After the chargeback claim, the amount of money and a chargeback fee are debited from the merchant’s account. The cardholder, i.e., the customer, receives the amount back in their account. The chargeback fee is generally $20 per claim. Many chargebacks can place a business into a high-risk business category. We can combat a chargeback by using some simple tricks and tips.
Sources Of Chargebacks
Following are the three common reasons that cause chargebacks in most businesses:
- Merchant error: This is the most common source of a chargeback, leading up to 40% of all chargebacks. Charging for the inaccurate amount or duplicate billing causes such errors. Merchant compliance review can help in the detection and decrease of these errors.
- Criminal fraud: The customer’s card number is hacked or stolen by fraud. The scammers then use the number to make unauthorized payments. Usage of chargeback alerts and fraud filters can reduce this type of chargeback source.
- Friendly fraud happens when a customer does not ask the merchant for a refund and visits the bank directly to get the transaction amount back. Also, sometimes the customer knowingly files a chargeback after purchasing an item to avoid paying.
Top Ways To Reduce Chargebacks
Keep Your Website Secured And Updated
Several frauds look for website bugs and errors in outdated software. So, merchants need to update their websites regularly to prevent technical errors. They must encrypt the data on their site so that the fraudsters fail to collect the cardholders’ credit card numbers and other details.
Provide Complete Product Descriptions
The customer can make a chargeback claim if the received product has no similarity with the product shown on the merchant’s website. So, try to include the complete details of the product to avoid the customers’ confusion while purchasing. Make sure the following information must appear on the product’s page:
- Product dimensions
- Multiple pictures from different angles
- Videos of the item in use
- Reviews of the existing customers
- Customer service contact
Work With The Genuine Payment Provider
The payment processor must have anti-fraud tools to ease the transaction process. Also, the payment name appearing on the customer’s credit card must include the exact merchant name.
If the payment descriptor does not show the merchant’s name, the customer may doubt the transaction. So, if the merchant is using a different name for credit card statements, they must ensure the customer before the transaction.
Make Your Return And Refund Policies Clear
The merchants should provide a transparent refund policy on their website. Please keep it simple and easy so that the customers can easily understand. Provide the customers with a refund if they are dissatisfied with the purchased item. Moreover, add the complete details of how to return the item and request a refund. Providing timely refunds can surely help to reduce chargebacks.
Provide Shipping Details
The shipping charges and dates must be clear to the customers to avoid chargebacks and case of any delays and arrange an alternative solution if possible. Provide shipment tracking details on the website so that customers can stay updated about the location of their ordered package.
Deliver High-Quality Products
The merchants must ensure that all the delivered products are of superior quality. Avoid broken or damaged products, delays, & lost packages. People receiving damaged products or waiting too long for their ordered products may cause transaction disputes.
Provide Excellent Customer Service
The customers must find the contact details like phone number and email on the website. This will help them in case of inquiries or doubts regarding the ordered item. Provide 24/7 customer service and try to resolve the queries as soon as possible. If the customers are satisfied with the service, the merchant will be at a lower risk of chargebacks.
Maintain Detailed Record
Keep a proper record of the transaction amount, transaction date of the customer’s credit card, and other authorized details. All these details will help the merchant to fight against a chargeback. Try to maintain these records for a minimum of 180 days because most of the chargebacks are likely to happen during this time.
Preventing chargebacks can be one of the most challenging tasks for a merchant while running an online business. With the evolution of the eCommerce industry, chargebacks have also become a common issue that can cause enormous harm to businesses. We hope that our suggested ways will help you in dealing with chargebacks. Also, if you can find any other form of reducing chargebacks, let us know in the comment section.