Thursday, August 6th, 2020
A chargeback or reverse charge is what happens when a credit card-owner disputes a charge made to a store and receives a refund.
Usually, the card-issuing bank decides the case, and many times, the customer wins and gets an immediate reimbursement.
A merchant has 3-4 weeks to challenge the chargeback by issuing the documents of the controversial sale.
Some chargebacks occur for valid reasons such as damaged products or multiple similar transactions. In contrast, others are invalid and can be termed fraudulent, such as when a shopper disputes a perfectly legit charge.
Valid or invalid, a merchant must be active in chargeback prevention as it normally takes a toll on business.
High-risk merchant accounts are particularly prone to such reverse charges, yet excessive chargeback levels can threaten to bring down your business.
Common Causes of Chargebacks & Top Ways to Protect Your Business
It is possible to manage chargebacks, but only if we know how they occur. Here are common causes and how to protect yourself.
- Shopper Refunds
Never ignores a perfectly legit refund. Reverse the money back to the client’s credit card soon after confirming its legitimacy, to avoid a chargeback.
Also, prepare a clear refund policy for your ecommerce store. And lastly, add a “confirm payment” button before checkout to reduce the number of refund requests.
- Customer Service
Sometimes customers dispute charges only after trying to reach your support team to no avail.
To avoid this, provide your contact info on all channels, i.e., on your website, social media platform, marketing emails, etc.
Lastly, run a supportive team of agents who understand the consequences of a reverse charge to your business.
- Detect & Fight Chargebacks Before They Occur
Because everything happens online, ecommerce transactions are more prone to fraud.
Follow these steps to stay safe;
- Ask for the security code behind the credit card.
- Keep a list of knotty customers and block any transactions from them
- Set a cap for the count of per/day transactions per customer
- Keep proper financial records.
- Keep records of communication with clients and take not of shopper IP addresses.
Lastly, verify all addresses using verification platforms to match the card to the card owner’s address before allowing the transaction.
- Recurring Payments
Recurring payments are normal in subscription-based services and often involve automatic deduction.
It is advisable to stop deducting the agreed-upon amount as soon as the client cancels the subscription to avoid multiple chargebacks.
- Item Not Received and Late Products
Customers panic when they do not receive their goods. Use a shipping service with order tracking capabilities and give regular updates on product whereabouts.
Chargeback protection is a continuous process that must be prioritized. Accumulating reverse charges can lead to excessive levels and threaten to ruin a business.