Your Payments. Your Language.
You already know the obvious reason to avoid chargebacks: they cost your business money. But chargebacks are more than just an added cost to your operations, and a high ratio can be detrimental to your business. Once you’ve exceeded the allotted ratio, your account may be closed and your funds diverted in order to ensure the chargebacks are covered. Once your account is closed by one processor, it can be difficult to impossible to open another.
All businesses should be wary of the risk that chargebacks pose to their business, as they can come for a number of reasons, including fraud, which is an increasing issue with businesses of all types but especially for online businesses. In 2018 alone, U.S. businesses lost an estimated $6.4 billion in payment card fraud.
Outside of fraud, customers may file a chargeback if:
· The item was not received
· They received a substandard product or something different than expected
· Billing is incorrect
· They don’t recognize the charge on their credit card statement
Chargebacks can come for any of these reasons or through no fault of your own, but there are ways that you can help prevent them. Here are a few tips to combat chargebacks before they appear.
EMV transactions provide the most protection against chargebacks due to the added security involved in each transaction. The added information and sent with the transaction makes it more difficult for consumers to file a chargeback for fraudulent reasons. Keyed transactions are the most susceptible to chargebacks because they are more difficult to verify, so it's best to use the EMV chip whenever you have the option.
Confusion is a common reason for a chargeback. A customer may dispute a claim if they didn’t understand the terms of the sale or if they don’t recognize the name of the company that appears on their statement.
Provide detailed receipts and clear invoices for each transaction. Online and keyed sales are at particular risk for chargebacks, so make sure the description of the product is clear. If the customer receives something of lower quality or that is different than they expected, they are more likely to dispute the charge.
You’ll also want to be sure your website lists your terms and agreements, and that shipping times are clearly laid out for the customer.
Between 60-90% of fraud reported in 2016 was friendly fraud, when a customer provides false information while making a purchase. Chargeback and fraud prevention software can help your business avoid this kind of scam and is especially a good idea for businesses types that tend to be targeted for chargebacks.
Many of these software options can be integrated into your current ecommerce set up. If you’re unsure which fits your needs, our technical team can assist you in selecting the best option for you business.
A customer who feels heard will be less likely to dispute a transaction. The sooner the customer can get in contact with your business, the sooner their issue can be resolved, and the less likely they are to file a dispute.
Merchant Service Group LLC can help provide that support, with customer service and technical support that is available 24/7 to assist in locating a transaction or provide cardholder information when a refund is necessary.
Once the chargeback is filed, you may feel like you have little control over the outcome. The credit card company makes the final decision, but you can help your case by keeping detailed records of every sale, especially for online purchases, including receipts, shipping information, invoices, and any communication you had with the customer.