As a merchant, one of the things you’ll need to look out for to protect your bottom line and standing is chargebacks. Do you remember the old days when an unsatisfied customer would go back to the store where he or she bought the item and ask for a return? While this does still happen, more customers are reporting charges to their issuing bank instead. The issuing bank then reverses the charge and gives them a credit. Obviously, the issuing bank will want its money back, so it will debit the merchant’s bank who, in return, will debit the merchant.
Merchants with an extensive history of chargebacks could be denied a merchant account as they pose a risk. In addition to that, the merchant will have to pay fines and face other penalties for chargebacks. So, as a merchant, you’ll want to avoid chargebacks whenever you can.
So, how do you accomplish this? First, let’s look at a few of the reasons why a merchant might get hit with a chargeback in the first place.
Common Reasons for Chargebacks
- Customer doesn’t remember or recognize a specific charge on his or her statement.
- Authorization procedures were not followed.
- The order was not received by the customer, or the item was defective or not as described.
- Cardholder has cancelled the order and returned it, but he or she has not received a credit.
- Customer was charged twice for the order.
- Customer has cancelled an ongoing subscription and is still being charged.
Unfortunately, chargebacks are part of doing business – especially on the internet – but there are some steps a merchant can implement to reduce the likelihood of being hit with a chargeback. Consider the following tips to avoid chargebacks and increase your chances of being approved for an online merchant account.
Things You, a Merchant, Can Do to Prevent Chargebacks
First, please know that customers do forget what they buy sometimes. Make sure to have a billing descriptor that has your URL and name of your business in it so the customer can recognize it. The billing descriptor should be up-to-date as well. Another thing you should certainly do to avoid fraud cases is send an automated message to customers after a purchase has been made. This will allow customers to catch fraud more quickly and, perhaps, help you avoid a chargeback.
For many of the other causes for chargebacks, there are some really simple answers that are just good customer service. If you charge a customer twice by accident, contact the customer and remedy it immediately. Regarding product descriptions, be as accurate and precise as possible so your customers know exactly what they’re buying and there are no surprises. Also, provide an easy-to-understand and easy-to-find return policy to give your customers a better idea of how the return process will work.
Implement additional fraud protection on your website. 3-DSecure is a payer authentication solution for Verified by Visa and MasterCard® SecureCode™ designed to protect online merchants from fraudulent transactions and shift liability (in some cases) from the merchant bank back to the issuing bank.
Although you may not be able to avoid chargebacks all of the time, implementing these steps and strategies can mitigate many of the issues that often cause chargebacks