Chargebacks are inevitable for almost all businesses that use credit cards for checkout. However, online transactions, where there are no face-to-face card issuance (card-not-present) situations, are at more risk than card-present transactions.
Disputing a chargeback consumes a lot of time but not easy to ignore, given the high costs per transaction. Similarly, your business may be rendered high risk if it receives loads of chargeback complaints, and that attracts even more fees. The process isn’t easy, and every merchandise needs to learn about chargeback prevention and keep their transactions safe.
What is Chargeback?
A chargeback is a customer protection system that enables cardholders to launch complaints about merchant charges. Reasons can be numerous, including overcharging, lack of owner authorization, or sometimes friendly fraud, where customer disputes charges after purchasing to reclaim the payment.
It’s now upon you as a merchandise owner or operator to take steps into understanding the possible causes, prevention measures, and possible chargeback solutions to protect your business from extra fees.
How Does It Occur?
A chargeback can be a result of merchandise errors or fraudulent activities. For instance, a customer may use a stolen credit card to make purchases; it could be due to duplication of billing amounts or a client trying to get a refund mistakenly or intentionally after purchase.
Some customers prefer launching chargeback when things aren’t right with the transaction rather than communicating with you.
How Do You Prevent Chargebacks?
There are several ways you can avoid dealing with chargebacks in your company. Conscientious record keeping, effective communication, and managing fraud are some of the best ways to keep chargebacks at bay and increase your chances of winning the disputes if you get caught. Here are some preventive measures.
1. Be Proactive on potential shipment hitches
Let your customers know upfront if there’s a product that isn’t on the shelves, possible shipping delays, and be clear about discounted items before they make a purchase. Similarly, keep track of the shipping process and keep your customer posted on the progress at every step. That will help you avoid friendly frauds.
2. Create a clear refund and return policy
Always aim at having your customers solve all their purchase issues with you rather than through a chargeback. Having a transparent exchange, refund, and return policy will make it easy for the client to prefer reaching out to your business with their complaints. Also, offer multiple contact points, including phone, online contact forms, chat, and email, to ease communication.
Similarly, display the policies where they’re easy to notice, especially at the checkout page, and respond to every complaint promptly.
3. Be careful about billing descriptor
Your billing descriptor, also known as a merchant or statement descriptor, is the identity that displays when customers make purchases at your business. Customers will most likely launch a chargeback if the business billing descriptor doesn’t relate to the merchandise. To avoid this, ensure that your statement descriptor contains your business name, phone number, or website.
4. Subscription Cancellation Chargeback
A customer may launch a chargeback complaint if you charge them on a service they feel ought to have been canceled. Be sure to unsubscribe your clients when they ask for the cancellation of any recurring service, send notifications before making credit card deductions to fund subscriptions, and clarify that the service is regular during signup. That way, your customer will decide if they need the product and are willing to incur the costs.
Chargebacks are costly. As a result, it’s essential to understand how they occur, prevention, and how to navigate through the disputing process.