When you are a merchant, you are bound to receive abundant payments. When you are accepting payments -whether over the internet or in person, or over the smartphone, can always be liable for some chargeback. As a merchant, it is imperative for you to understand the chargeback process along with your basic responsibilities.
What is a Chargeback?
A chargeback can be regarded as the effect of some dispute as a result of the charge by the given credit cardholder. When the issuing bank of the card will take over the dispute, it will right away refund the overall charge to the respective cardholder. After this, they will file a proper chargeback through the acquiring system who will be responsible for drafting the refund from the given checking accounts.
The issuing bank will also send over a notification of the given chargeback. You will get the period of around 3-4 weeks for disputing the chargeback by offering valid documentation for the sale.
High-risk merchant accounts tend to be at a higher risk of some unsuccessful dispute of the chargeback. The condition should be that there is the absence of a properly signed receipt -offering proof of sale. There are both valid reasons (including damaged things and duplicate transactions) as well as invalid reasons (including fraudulent cases) for chargebacks. Merchants are expected to take preventive steps for minimizing the overall chargebacks -irrespective of whether or not the dispute is valid.
As a matter of fact, chargebacks can take place due to a number of reasons. However, there is one fact for sure -chargebacks can result in revenue loss for businesses or merchants. While it is not compulsory for you to be a chargeback expert, when you comprehend the challenge for which you are up against can help in improving your overall operational measures.
As you stay ahead of the chargeback, you can always ensure refunds in a timely fashion. Ensure that you are refunding the same debit or credit card with which the consumer made the payment. When you are not able to ensure timely refunds, it can result in a standard credit card chargeback or a returned item chargeback.
Another important step to ensure is to always ensure that you are communicating how long it will take for the customers to observe the given refunds. The given information might appear basic. However, as far as integrity of how your business conducts itself and ensures customer retention is concerned, it is always recommended to minimize chargebacks.
Top Strategies for Minimizing the Chargeback Risk
There are several reasons due to which a customer might raise a dispute for some fee. The manner in which the retail would manage the risks around the given disputes will help in determining whether or not it would result in a chargeback.
Here are some common approaches to mitigate the overall risks:
#Ensuring Customer Refunds
Upon the request of the client while being eligible for the given refund, you should ascertain that the processing is done fast. It will help in avoiding the scenario of ‘charge not processed’ chargeback. To top it all, you should make sure that the refund finance policy of your business is specifically mentioned with every trade.
You should ask the customers to select the ‘I Agree’ icon before the order gets finalized. Ensure that you are only refunding the amount to the same debit card or credit card with which the initial purchase was made.
#Implementing Diagnostic Controls for Fraud-centric Charges
As the card is not going to be present throughout the trade, it is estimated that online transactions tend to impose a higher risk of potential frauds. Here are some ways in which you can minimize the overall risks:
- Requiring the security code on th credit card’s back
- Maintaining a detailed record of clients having problems quite often while blocking transactions of the given customers
- Limiting the total number of transactions by the same customer for a fixed time period -example, like day, hours, or weeks
- Maintaining stable financial records
- Tracking communication with clients while documenting customer IP addresses
- Using a reliable address verification procedure for matching the address of the cardholder before purchase approval
#Ensuring Bespoke Customer Services
When a particular customer is not able to come across information about your business in case of some criticism or doubt, the individual can right away advance to the respective credit card company to dispute a charge instead of reaching out to you first. Ensure that your customer support services or team deliver access to proper information that is easy to find.
Contact information about your business should be readily visible on the website. You can also include the same on shipped items while having the same all over on the mail. Aim at responding to your customers quickly. This will encourage the clients to reach out to you with the given dispute before heading out to the respective charge. This offers you the opportunity to resolve the existing problem while improving the overall reputation of your business.
#Handling recurring Transactions
The concept of recurring transactions are mostly employed for the purpose of subscriptions. Moreover, they tend to be automatic in most cases. As soon as a customer would cancel a subscription, you should aim at acting instantly to stop the process of automated payments. This will help in avoiding multiple chargebacks from the given customer.
#Not Receiving Products
Your business cannot impose a fee before the provision of the products or services. When you make use of a dedicated delivery service for offering delivery confirmation, it will offer proof of shipping. Leading companies like Amazon make use of the same concept of delivery tracking for maximizing organization and minimizing further complications.
Ensure that you are disclosing all the essential terms of the process of installment. You can also ask the customers to accept the given terms by using the ‘I Agree’ icon. The first-ever installment payment cannot be processed before the product shipment.