Dealing With Chargebacks

October 15, 2021

Chargebacks occur inevitably as a part of running a business that accepts any payment. A chargeback is when a customer refutes a charge with the bank linked to the card used to purchase anything online or in store. Therefore, it is important to try to minimize your number of chargebacks as much as possible. There are several ways businesses can decrease the risk.

Merchants should try to do everything possible to ensure that customer disputes do not reach the chargeback stage. Usually, before contacting the card issuer, customers will attempt to contact the merchant directly with the problem, and when this happens, merchants should be able to deal with the issue and try their best to resolve it. Ensure that you are including a good way for customers to contact you. This way there is no need for the customer to file a chargeback.

Why Customers Issue Chargebacks

Chargebacks are typically issued when customers do not receive an item they ordered online, the item they receive is drastically different than they perceived or defective, they are incorrectly billed, or they don’t recognize the merchant name on their bill. Identity fraud, in which someone uses someone else’s account to make orders, is another possible reason for a customer dispute. Each of these issues can be addressed by taking preventative steps to decrease their likelihood of occurring.

To prevent fraud, you can make sure you’re taking the precautions with your credit card technology, such as having EMV capabilities and making sure your system is PCI compliant. Furthermore, merchants should make sure that the descriptor for their business that will appear on customer’s credit card bills is clear. If people see charges on their bills that they do not recognize, they are much more likely to question, and possibly even dispute, the charge. Therefore, businesses should simply make their descriptor match their business name as closely as possible to avoid this unnecessary confusion and possible chargebacks.

What You Can Do to Minimize Future Chargebacks

With online businesses or businesses that have an online market as well, you should make sure that product descriptions are as accurate and truthful as possible. Customers should know exactly what they are purchasing and should not be surprised when they receive the product. If customers know exactly what they are buying before they buy it, they are much more likely to be satisfied, with no need to return the product or dispute the charge. On the same note, you should also make sure your return policy is completely clear, in case customers do have a problem with a product and need to return it. If they are misled about the process or their ability to return something, this would be a reason for them to dispute the charge. Furthermore, it’s best not to charge a customer until the item has shipped because if there is a large delay between the charge and the delivery of the product, a customer will be more likely to suspect fraud and question the charge.

Taking these precautions will hopefully help reduce the number of chargebacks you will have to deal with, but it won’t eliminate them completely. But rather than just accepting every one that you receive, it’s also important to remember your right to fight chargebacks. Each chargeback costs you the amount of the charge plus a fee from the merchant account provider. So if there are chargeback disputes that you think you could win, it is worth a try. Contact us if you have any questions.

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