There are several aspects that business owners have to be cautious of when selling their goods and services digitally, and these include chargeback. When this particular aspect goes out of control, companies might incur severe losses, impacting their stature among credit card processors. If you wish to ensure that your company operates efficiently and profitably, you need to take the essential measures to ensure that you have a low to zero chargeback rate.
In this article, we will assist you with the several steps that you can take to avoid chargebacks altogether for the efficient working of your business. But before moving to that, one question that may arise in your mind is what we mean by a chargeback?
To answer that, let’s begin!
What Is A Chargeback?
A chargeback is a kind of customer protection where a bank or a card company bids specific fees from the merchant to be overturned. It can result from malicious motives or even involuntary faults, and the merchants can be liable to hefty penalties if chargebacks exceed certain limits.
Many e-commerce sellers experience chargebacks more frequently but do little or nothing to resist it, even if the consumer is at fault. Most of these sellers assume that it will just cost too much hassle to prevent chargebacks. Instead, unfortunately for smaller companies, these transaction confrontations are generally deemed an inevitable business cost.
What Are The Most Common Reasons To File Chargeback?
There are several different reasons to file chargebacks. Taking time to understand these reasons can help educate business owners with the correct know-how so they can take the essential measures to prevent chargebacks
- Dispute In Shipment Service
Customers generally dispute payments if they fail to obtain the product or service they have paid for. It is therefore essential to keep the shipping receipts and track the goods dispatched to the consumer. It will help particularly during disputes where the consumer claims that the goods have not been received.
- Credit Card Problems
Some consumers fraudulently deny that they have engaged in payments over mail or phone. If you happen to approve orders by phone call, ensure that you accumulate all the needed information from consumers like their complete residential address, credit card credentials, and email address to confirm they placed the order. You can even request a confirmation over email before trucking any products.
- Invalid Account or Credit Card Number
It is another most prevalent reason for chargebacks. Make sure that your system is adequately equipped to dismiss invalid or expired credit cards. Chargebacks mainly arise if a system can’t discover the invalid credit card or account number used. Generally, this is nobody’s fault and a mere technical error. However, it is best to always verify payments at checkout to prevent this from happening all the time.
How Can Chargebacks Harm Your Business?
Chargebacks can cause harm to your business in the short-term or even for the longer term if not dealt with correctly. With every filed chargeback, you are at risk of losing significant revenue from transactions, whether through loss of direct income or combined if you lose the value of your product or service and the direct revenue if the consumer is unethical and malicious.
If your chargeback ratio exceeds a certain point, you will either have to pay a much higher processing price or, in some cases; you will entirely lose your ability to sustain and hold a business account, generally at short notice. If this occurs, you will have to search for a processor inclined to engage high-risk merchants at higher risk prices to keep your company from falling. However, it can get even worse as there have even been examples where chargebacks kill a business entirely – don’t let this be yours!
Chargebacks are very much avoidable. Prohibiting these is not just to decrease the risks but to deal with this crucial task. Failure to do so might kill your business in several ways.
How to Prevent Chargebacks?
By simply assessing the following, you will be eligible to keep your consumers pleased and prohibit the fraudsters from harming your business while also keeping your business account in good stead:
- Give Detailed Product or Service Descriptions.
Be as translucent as possible with your consumers. Let consumers know precisely what they are buying. It will not only prevent chargebacks but also boosts your brand stature.
- Provide Excellent Customer Service
Round-the-clock customer service support and a customer-friendly approach can reduce customers to approach their card issuer directly to resolve disputes and hence prevent chargebacks.
- Provide Easy To Understand Refund Policy
Companies need to have apparent refund protocols if they wish to avoid chargebacks. Exhibit your refund policy on registers, display the information on your website, and print the guidelines on each receipt. Be as specific as possible, including asserting the window of time for refunds, returns, any restocking charges, and any exemptions.
- Mention Comprehensive Billing Descriptors
Make sure all product descriptions are mentioned on the product clearly and printed in an easy-to-understand fashion on receipts. When customers receive a credit card bill, they must find the brand name, the payment date, and the details mentioned. Along with detailed billing descriptors, maintain your records carefully. Meticulous record-keeping enables you to fight back against any chargeback occurrences.
- Maintain a Detailed Record of Transactions
The more information you record for every shipment, the better. A few things are needed, such as the paid amount, date, the name of the cardholder, and other fundamental data. Go above and beyond to assimilate what card issuers generally call “compelling evidence”; it includes consumer’s email address, signatures upon delivery, consumer’s phone numbers, and IP addresses. Every issuer has its own set of regulations that you require to pay close attention to, which can help you avoid chargebacks.
Having a chargeback filed against your company is never good for the reputation of your business. The outcomes can be harmful to your business if it’s not amended effectively. When it comes to chargebacks, the terrible thing you can do is nothing. Formulate a strategy to avoid payment disputes using data from your payment services, POS systems, and team members.