Chargebacks are essential in the financial industry to preserve public confidence in credit and debit card transactions. Through chargebacks, consumers are protected against fraud and errors when using their cards.
Businesses, on the other hand, must always find ways to prevent chargebacks through clear communication between them and their customers because chargebacks are costly and time-consuming.
Communication ensures proper handling of disputes, correction of mistakes, or clarification and resolution of the customer’s issues before they initiate a chargeback. Here are eight detailed steps to take to reduce chargebacks in your business.
You cannot entirely eliminate chargebacks from your business. However, implementing these steps will significantly minimize their impact on it.
A payment or billing descriptor is an explanation that appears on a customer’s credit or debit card statement for a given transaction. It allows customers to identify their card transactions based on the date and the company.
On credit card statements, the descriptor usually has up to 22 characters, including the merchant’s contact information, like a phone number.
Therefore, ensuring that your business name or a recognizable abbreviation appears on your customers’ billing statements to reduce the likelihood of them disputing it.
According to a report from chargebacks911, the leading cause of chargebacks is errors in merchant policies. Create clear and detailed policies regarding refunds, shipping, cancellations, and even chargebacks to prevent or reduce them.
Clear policies will prevent fraud and may help you recover your money after a chargeback. In your chargeback policies, discuss the proper use of chargebacks so that some customers may consider using other channels instead of creating disputes.
Lastly, ensure that your customers are aware of these policies before making a purchase.
How you describe your products will be vital to prevent chargebacks. Creating deceptive or exaggerated product descriptions will damage your customers’ trust in you and also prompt many of them to dispute the transaction.
Therefore, be as detailed as possible, list multiple pictures of the product and describe any features that customers might find confusing.
Making it easy for customers to contact you is needed to reduce chargebacks. Customer service representatives should also be patient with customers to avoid any miscommunication and conflicts that may result in initiating chargebacks.
Therefore, invest in customer service personnel who are good at conflict resolution and are willing to work with customers to settle their concerns amicably. Furthermore, have multiple communication channels such as email, chat, social media, and phone where customers can easily reach you.
Using secure and reliable payment gateways will help you significantly prevent chargebacks due to fraud. These payment processors should comply with industry standards and have advanced technologies like SSL encryption to protect customer data during transactions.
Implement 3D Secure for an added layer of protection. These added measures are highly recommended for certain business types. These service systems are now fully consumer-friendly and frictionless so your customers don’t even know your business is using them.
Utilizing an Address Verification System (AVS) is essential to reduce the risk of fraud and consequent chargebacks. CVV and CVC are very valuable tools as well and should be required as well.
AVS will compare the registered customer’s billing address with the address on the card issuer’s file. If they don’t match, it will be flagged as a potentially fraudulent transaction, allowing you to review it before processing.
Customers might create non-receipt of merchandise disputes if billed before their orders arrive. Therefore, avoid charging cards until the goods are shipped.
Charging too late should also be avoided because it can create a “late presentment” dispute, which indicates that you waited too long to charge the customer. Process transactions within a specific time frame, like shortly after shipping the order, to prevent this chargeback. Late presentment can also cause downgrades or rate increases, ultimately costing your business more money.
Send Email confirmations for each purchase and shipping notification with tracking information like delivery dates and order status. This initiative keeps customers informed about their orders and prevents misunderstandings.
After fulfilling orders, send follow-up emails to the customers verifying receipt of goods and asking if the customers have any concerns.
At Group ISO, we understand how important it is for businesses to prevent or reduce chargebacks. This is why our products and services, like payment integrations, have been designed with security and reliability. We offer secure payment gateways for online payment processing to avoid chargebacks due to fraud, among other things. Moreso, our payment processing experience is seamless, with features that will help you build customer loyalty in your business and ensure that you eliminate chargebacks due to technical issues.
Schedule a free consultation to find out how we can help you prevent chargebacks in your business.