Online businesses and the E-Commerce industry witnessed a massive boom across the globe with the advent of the Coronavirus pandemic. The number of the people who preferred online over offline before the pandemic was already pretty high, but with the changed market dynamics and consumer behaviour the number of the latter have only risen. And, why not? With the introductions of smarter and advanced payment options the online shoppers can make transactions with a complete peace of mind.
Carrying transactions has become easier than ever, but everything good comes with it own set of drawbacks. Credit card chargebacks is one of the main issues surrounding digital payments for online merchants. Card issuer companies started the chargeback system to solve potential issues between merchants and cardholders.
Fraudulent use of credit cards, faulty or broken goods, bad customer experience, duplicate payments, etc., are some major reasons that lead to chargeback claims from customers. Of course, some of these claims are genuine, but many fraudsters are using this power in the wrong way.
Although it is not possible to avoid every single chargeback, businesses should definitely try to find the reasons behind these claims and do everything possible to avoid them.
Need To Avoid Chargebacks
The main reason to avoid chargebacks is that they cost a lot of money to merchants. Multiple disputes can cause huge losses and ruin your sales revenue completely. Here is why you need to avoid chargebacks.
- When a customer files a chargeback, the situation is looked at by the customer’s card issuer and most of the time, they rule in favour of the customer. As a result, the customer receives his money back from the merchant.
- If a business appeals against a chargeback and loses the dispute, it will lose the amount paid by the consumer, potential profits, and marketing/advertising costs. Also, most payment service providers charge high processing fees to look into chargebacks and investigate them.
- Multiple chargeback claims are bad for your business’ reputation. Most payment service providers and other financial institutions look at your chargeback rate before lending money or other services. It is the ratio of number of chargebacks to the number of transactions. If this ratio is more than 1%, your account can be terminated. PSPs will consider it risky to partner with you and will demand high fees.
- Businesses lose a lot of customers and potential revenue because of chargebacks. Most customers file a chargeback, get their money back, and never purchase from the concerned merchant or business again. Customer satisfaction is really important for any business, and unhappy customers can file chargebacks.
5 Ways to Avoid Chargebacks
In most cases, chargebacks disputes are won by customers, not the merchants. It is not possible to remove the threat of chargebacks entirely, but businesses can surely reduce them. Here are the five best ways through which businesses can avoid chargebacks.
1. Be clear about your return and dispute process
Instead of contacting your business regarding returns or other things, customers tend to file chargebacks because it is easier. You can add FAQs on your website regarding your return or exchange policies so that customers do not face any difficulties. Customers should be able to initiate returns online and track their progress.
Your customer service should be responsive and helpful. There are various ways to communicate, including e-mail, phone, call, etc., and you should provide all of them. If a customer returns a product, you can offer free shipping so that customers are satisfied and do not file unnecessary chargebacks. Also, you can ask customers for reviews on your products to show them that you care.
2. Don’t sell counterfeit or defective goods
When a consumer spends money, he expects to get the best value for it. Faith and trust is a big part of the E-Commerce industry. Make sure you have genuine, high-quality products listed on your website. Customers cannot see the product live and try it out. They just know about the brand, images, and features of the product.
Your customers will be satisfied if the quality of your products is high. If you sell fake, defective, or counterfeit goods, the consumers may get angry and file a chargeback with their card issuer. Also, partner with a good shipping firm so that your products are not damaged during delivery and reach the customer in perfect condition.
3. Use clear product descriptions on your website
All the products listed on your online store must have clear images and product descriptions. People read these descriptions and customer reviews while shopping online. The product descriptions should be accurate and depict all features and benefits of the concerned product.
Consumers will get angry and can raise chargebacks if they do not get the product as described on your website. Do not make false claims, and make sure you send genuine, high-quality products. Include multiple images from different angles and information about the material, uses, size, weight, etc., of the products.
4. Use multi-layered payment getaways
There is a lot of risk of failed transactions during card-not-present transactions. Online merchants need to partner with highly secure, trustworthy payment service providers like PayPound with quality fraud-prevention technologies. Consumers want to make payments conveniently, and top payment getaways make sure this happens.
Such PSPs have features like chargeback notifications, e-mail and phone verification, fingerprint sensors, buyer limits, card verification tools, order confirmation tools, etc., to prevent friendly fraud and other scams. This is one of the best ways to minimize chargebacks and improve the shopping experience for your customers.
5. Maintain all sales and chargeback records
Businesses need to collect, maintain, and analyze all data related to sales, returns, exchanges, chargebacks, etc., in a secure platform. These insights and stats will keep you informed about everything. When a consumer files a chargeback, you will have clear transaction reports for your investigation and appealing process.
Most payment service providers allow businesses to integrate this data directly into their system and keep it secure. Chargeback management becomes easier through this, and you can also predict potential disputes or chargeback claims by customers.
The E-Commerce industry is rising at a high rate, but more and more merchants are facing chargebacks from consumers. Even when there is no real need, some consumers file for chargebacks, and the merchants lose a lot of money and sales profit. There is an immense need for businesses to prevent this issue. Although it is impossible to remove the problem of chargebacks completely, there are many ways through which a business can avoid or reduce them. One of the best ways to do this is to partner with a high-risk, secure payment getaway like PayPound. All your card-not-present transactions will become secure, and it will help a lot in preventing and managing chargeback claims.
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