7 Ways to Reduce Chargebacks and Save Your Company Money
If you are a business owner, you know the great annoyance that can come from chargebacks. Maybe a customer claims to not have received a product or they say there is a problem with the product and a chargeback is issued. Chargebacks can also happen due to actual cases of fraud in which someone’s card information has been stolen. Many business owners believe that chargebacks are just an unavoidable part of running a company and so they have come to accept it as a necessary evil. In fact 47% of merchants have come to accept fraud, believing there is nothing that can be done about it and 20% think it is too expensive to control. The truth is though that chargebacks can be incredibly costly to you with an average of $15,162 in expenses per month. Actions can be taken to avoid chargebacks however and they can be reduced up to 40% if the right steps are taken. With that in mind, here are 7 ways that you can reduce chargebacks.
1. Use a Recognizable Name on Credit Card Statements
One common reason why a customer might refute a charge is because they do not recognize the company name on their credit card statement. If you are using a name on your credit card statement that is different than the name you operate under this can cause confusion to customers and result in chargebacks. Taking this simple step to minimize any confusing discrepancies could result in significant savings for you.
2. Be Easy to Reach
It can be frustrating to a customer if they are trying to reach you about a confusing issue with their bank statement and you are not very accessible. If a customer has been trying to contact you and they are unable, they might just issue a chargeback out of frustration. If you let your customers have easy access to you, you will save money and have overall happier customers.
3. Be Honest with Your Customers
If you run an online store, make sure the product descriptions are accurate and that you are honest with your customers about the features of your products. A common reason for chargebacks is that a customer was oversold on a product and a chargeback ended up being issued due to an unhappy customer. Avoid this mistake by being upfront with your clients about the items you sell.
4. Stay Away from Automatic Subscriptions
Let’s face it, many of us sign up for a free trial specifically for the “free” part and have no intention of actually continuing a subscription. Stay away from automatically charging a customer after a free trial expires. This will result in unhappy customers and possible chargebacks, which could potentially cost you more in the long run.
5. Provide Prompt Service
If a customer has to wait longer for a product than they were anticipating, they might get the idea that they won’t be receiving it at all which could result in a chargeback for you. The best way to avoid this is by being prompt with deliveries and to maintain communication with your client throughout the process.
6. Be Good About Issuing Refunds
Another effective way of avoiding chargebacks is to provide your customer with good service and provide easy refunds if necessary. Refunds may be a hassle and can make you feel like you are losing money but they will help you avoid chargebacks and help you save more money in the long run.
7. Know The Reason for Chargebacks
Knowing the real reason for a chargeback can be a helpful means of saving you money. Sometimes a customer will issue a chargeback claiming it was unauthorized when truly it was just the customer regretting their purchase. Knowing why a chargeback happens will help you avoid spending unnecessary amounts of money on fraud prevention.
Chargebacks are a frustrating but inevitable part of running a business. However, following these simple steps can help you greatly reduce them and bring substantial savings to your company.