Top Tips to Avoid Chargebacks
by Abdul Aziz Mondal Finance Published on: 16 August 2022 Last Updated on: 25 September 2024
More and more merchants in online business are facing chargebacks and are looking for ways to prevent them. After all, these transactions have a negative impact on business, reduce profits, and impact partnerships with banks.
In order to effectively prevent chargebacks, you need to identify the root causes of disputes and then resolve these issues.
There are many reasons why a customer may file a chargeback with the issuing bank.
Here are seven basic tips for avoiding chargebacks and keeping your company profitable.
Follow the Rules
Each card network, local or federal processor, sets certain rules about processing payments. If you violate those rules, the customer has the option to issue a chargeback. Each card network has a set of reason codes to identify transactions that violate their rules. Below are some of them:
| Authorization not received – The merchant should have requested authorization from the issuing bank but did not send the request. Wrong currency – the seller didn’t meet the currency conversion settings. No response – the merchant received a request for transaction information but did not respond to the request. |
It is important to follow these and other requirements to avoid chargebacks. Study the chargeback reason codes to better understand why they happen and what you can do to prevent them.
Sell High-Quality Goods or Services
Since buyers don’t personally know sellers on the Internet, it’s hard for them to trust. This can be done by providing quality products and services.
When customers try your products or use your services, they will be able to leave feedback on their user experience, which will affect your reputation. If a customer gets a negative reaction, they are more likely to get a chargeback.
There are several reasons that have to do with the quality of the product when buyers may contact the issuing bank for a chargeback. For example, counterfeit goods, when a customer hopes for an original product but receives a counterfeit.
When goods don’t match the description or images on the site, it upsets customers and leads to a chargeback. It’s the same when the orders arrive damaged, and the quality of goods doesn’t match what was advertised.
To avoid these problems, it is important to pay special attention to product quality and provide the customer with a first-class customer experience.
Prevent Criminal Fraud
Fraud refers to using a buyer’s payment card data without his knowledge. And when such transactions occur, they most likely lead to chargebacks. Fraudulent transactions can occur with or without a card.
If you don’t know how to prevent chargebacks, you should turn to a service that specializes in such disputes.
The Chargebackhit solution prevents chargebacks and fights these claims to resolve them as quickly as possible. It uses various evidence and transaction data to increase your win rate in its work.
Fulfill Orders Promptly & Accurately
The efficiency of order fulfillment, as well as the quality of products, is an important part of the chargeback prevention strategy.
Because today’s customers are used to having their needs met almost instantly, they will not accept slow order processing, incomplete packaging, poor quality of items, or damage during shipping.
Within the card networks, there are several code reasons that apply to poor quality order fulfillment.
These include: goods or services not received, goods damaged, etc. Every merchant must be diligent in making sure that they perform their duties properly and fulfill every order 100%. It is important to train your team regularly and improve their skills.
Use Clear Billing Descriptors
There are cases when customers read their bank statements and can’t understand what they were charged for.
This is due to the fact that the trade network has not recognized the merchant. To avoid such situations, it is important to use a clear name for customers in the descriptor.
This will allow the customer to understand exactly what he bought and from whom.
Write Customer-Friendly Policies
Simple and straightforward customer policies are the must-haves for today’s online business. Every customer should be able to find exchange and refund policies on the site easily and be able to take advantage of them as well.
If the policies on the site are misleading and do not make it easy to take advantage of the refund opportunity, the buyer is more likely to contact the issuing bank with a chargeback.
Policies should have clear rules. They should describe what you expect from buyers and what you offer. Among the rules that shoppers are sure to appreciate are extended return periods, as well as the free return shipping.
Such rules will make cardholders feel safer buying from you, and the number of orders from you will increase.
Provide Exemplary Customer Service
Competition in online trading is very high, so if customers are not happy with their purchases, they will want their money back first and then will go to another seller. That’s why it’s important to offer exemplary customer service.
There are several reason codes that can be attributed to improper customer service. For example, a canceled recurring transaction indicates that the merchant tried to charge the account again after making a cancellation request. Another case is when a customer claims to have returned an item, but the amount was never returned to their account.
To avoid chargebacks for these reasons, you need to resolve customer complaints quickly and offer excellent customer service.
Always comply with return or refund requests on short. Also, make sure that the employees responsible for these actions do everything as quickly as possible.
Once you’ve processed a return or refund, be sure to inform the customer of the actions taken and give them all the contacts so they can reach you with any questions.
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