Online businesses are considered to be high risk businesses, therefore being an online merchant you will always be under a dilemma, as you can at anytime face a chargeback on the goods or service sold.
The customer can at any time contact his credit card issuing bank because he wants the money for the purchase back. Such a transaction (where a customer demands for the refund of his money from the credit card issuing bank) is termed as chargeback in the ecommerce world.
There are likely chances that some customers may be unsatisfied with the services or goods they’ve purchased, or may have received a broken or damaged package; therefore chargebacks are inevitable, though there are ways a merchant can prevent chargebacks.
Most Common Reasons for Chargebacks
- One of the very common reasons for chargeback is fraudulent transactions. There are chances that the transaction made is fraudulent.
- Chargebacks may take place when you don’t receive a proper credit card, debit card (or any such instrument used to make payment) authorization
- When a customer doesn’t recognize the charges, this may happen when someone else uses a customer’s card
- Chargeback may occur when the customer doesn’t receive his purchase, though he has made the payment for it
- Customer dissatisfaction with the goods of services purchased is the biggest reason for chargebacks
- Chargeback may also happen when the customer is mislead and the processing amount on the bill statement is different from the actual sale price
- Chargeback can also take place when the product description is misleading or inaccurate
- When a person receives broken or damaged products, they he can claim for a refund
As we have learned, chargebacks cannot always be completely evaded, but there are a few steps that you as a merchant can take to help yourself with chargeback prevention. The more versed you are with the processing procedure; the less likely you are to make mistakes that can lead to chargebacks. To benefit our clients, here we’ve listed below some chargeback prevention tips that they can follow.
- Fraudulent transactions can be a big reason for chargebacks, so we at Advanced Merchant Systems recommend all our merchant clients to screen their payment gateway for any kind of fraudulent transactions. This is so because if you can avoid fraudulent transactions then you can to a great extent avoid chargebacks.
- Another way to cut down on chargebacks can be to send an email confirmation of a transaction to the customer immediately after the purchase is made. Sending an email confirmation will help you prevent chargebacks because the customer didn’t make any dispute when the order was made, and cannot do so later, as you will have evidence.
- Shipping the customer’s order in time can help prevent chargeback. Always mention clearly in your shipping policy the time a customer should receive the delivery and always try and stick to the deadline.
- Always ask your customers to sign on receiving their packages. Many chargebacks occur because customers claim that they never received their package. By getting them to sign on receiving the package, you are attaining a proof of their receipt.
- If possible, you can request the customers to email you a copy of their credit card, photo identity and signature specimen. This can benefit you when you fight a chargeback because you will be able to prove that customer authorized the transaction.
Chargeback prevention is simple and can help a good ecommerce business flourish and conduct more consumer benefiting practices. The aforementioned tips can help a merchant prevent chargebacks, but the merchant needs to be really careful all the time because there will always be a few customers who will get past you.
To find out more, call us at 855-267-8472 for a non-obligatory discussion!