In its initial days, offshore merchant accounts were privileged with higher leniency towards chargebacks. However, times and policies have transformed radically in recent times and now issuing banks have strict guidelines to follow.

Even if your business abides by all the guidelines from your issuing bank, it’s virtually impossible to eliminate the probability of chargebacks hampering the pace of your business. However, following an effective approach can help you maintain low chargebacks.

In that contrast, managing refunds is one successful tactic and the following paragraphs will illustrate it fundamentally.

How Refunds Help Lower Chargebacks?

Managing refunds efficiently assists businesses with a liberal money back procedure and will show successful results on a longer run.

This probably suggests to refund the customer, in case he isn’t satisfied with the product or service requested.  The suggestion seems valuable, if you are retailing a lower ticket service or product.

However, most high risk merchant account holders disagree with such recommendations. They advocate that majority refunds requested by consumers are fake.

Common examples of such events are when customers request refund for products that weren’t delivered or are defected. Besides this, a customer still has several reasons to claim a refund against his order.

With such possibilities, it’s understandable why a merchant can suspect the request as fake and deny refund. However, all requests can’t be fraud and might have valid reason supporting them.

Besides this, there’s always a gamble of encountering a customer who understands and knows how to manipulate with the system. Such customers are termed as friendly frauds because they deploy issuing banks into agreeing chargebacks. However, such frauds make merchants suffer loss of millions every year.

Rejecting the Refund Request

According to the mentioned scenario, a merchant will only be left with one option and that’s to reject the refund request. But is this option helpful?

When a merchant refuses to refund customers request, he can only call the credit card company and demand the charge with merchant chargeback.

Even tough, a merchant wins the chargeback dispute, the processing statements from previous months will still reflect the chargeback. This is why most costumers directly call credit card companies as there’s nothing much a merchant can do about it.

Since the refund policy favors the customer, a merchant should accommodate the request. However, if the request seems fake and paying chargeback is reasonably less to the cost of refund, deny the request as you will pull it back in future.