For online merchants, credit card chargebacks imply a costly reality. Chargebacks occur when your customers report dispute charges to their credit card issuer. If the issuer deems that a dispute valid, you will be required to pay the money owed for the transaction along with a chargeback fee from processor, which can be from $15-$100.
The most common reason why chargebacks occur is that a criminal has used the payment credentials of a victim and made the purchase in their name. The victim whose credit card has been employed for the fraud payments will make a claim for getting back the illegally withdrawn funds. After this, the bank will initiate chargeback to you after it obtains documentation from credit cardholder that a particular transaction was fraudulent.
Apart from this, you will have to bear the additional fee by their processing banks. Chargebacks also occur due to the following ways –
- The goods were either defective or a different product arrived.
- The customer didn’t receive the services or goods purchased.
- Buyer’s remorse, which means that the buyer regrets the purchase or receives a product not as per expectations.
How To Manage Chargebacks?
Chargebacks can be managed through effective eCommerce chargeback management solutions. Each chargeback that you get has a different case number whether the chargeback is from Visa, MasterCard, PayPal, American Express, Discover, or any other. Every provider possesses its own case management system. But there are all-in-one management solutions if you find it tedious to examine each tender individually.
During busy retail seasons, like the holiday or sale seasons, it is important for the retailers to make sure they have a dedicated and trained team to expedite and handle disputes. By focusing on retrieving lost funds, retailers can make sure they do not lose excessive amounts from chargebacks.
How To Decrease Chargebacks?
After a chargeback has been made, it is the duty of the retailer to respond to chargeback notice. However, this process can be tiring. And this is why you can use any of the following ways to decrease chargebacks.
- You must respond to the chargebacks as soon as possible. This adds immense value to your business and is a part of the customer serviceexperience a business should offer.
- The buyer’s remorseis amongst the primary causes for the chargebacks. So, you must mention your contact number clearly on your site where all customers can call. In case, the customers aren’t sure if they have made a purchase, they can reach out to your customer service team and know more about their purchase. This will let you solve the cardholder’s issue ahead of time, and is an effective way to avoid a chargeback.
- You must ensure that you receive complete authorization for an order. You can do this by verifying that you have obtained authorization for the right dollar value of order. For preventing improper authorization chargebacks that are initiated by banks, you should acquire authorization for each package you ship out from your warehouse/store. If you get authorization for the order and don’t ship it out within 7 days, you will have to receive authorization again before processing the order.
- It is important not to charge your customers until the goods are shipped. An authorization hold is different from the customer being charged. You should avoid charging the customer until the services have been offered or the goods have left the warehouse.
- When you receive a chargeback, verify the address of the customer by calling Voice Authorization Center for a particular tender. You should also verify the customer’s address, phone number, and name.
- You may also mention the refund information on packing slips or receipts in every shipment. Moreover, the customers should easily find your refund policy and process online. For customers, returning an item is less time consuming and costly than filing a chargeback is for the retailers. Making the return process easy and simple for customers also enhances the customer experience.
- If you are providing services and goods online, you must accurately and clearly describe the services or products. Additionally, a ‘contact us’ or customer testimonial section to contact to know more about the product before making a purchase can help in lowering chargebacks. Some of the services sold online include online consulting, remote computer diagnostics, digital products, website memberships, and website purchases. Customers tend to have numerous questions about these services.
- Another way is to make sure that you receive a signed proof of all packages that are delivered. Collect and store a record of tracking numbers utilized for each parcel to show a particular tracking from your warehouse to your customer’s door.
The Bottom Line
Chargebacks can be an expensive nuisance for online retailers. While you can win the chargeback cases, it is important to understand that there are several ways a chargeback can occur. But with the tips mentioned above, you can not only reduce chargebacks, but also improve your customers’ overall customer experience with your brand.
