Chargeback
Protection

If you’ve been operating for any length of time, you know that dealing with chargebacks is one of the most frustrating aspects of running a business. Too many merchants treat chargebacks as an unavoidable cost of doing business. Chargebacks are a costly and unfortunate fact of life for many small businesses that accept credit cards. However, there are ways you can protect yourself against unfair chargebacks

High Risk Merchant Account

Achieving success as a high risk merchant can seem very daunting. The term “high-risk” itself carries negative feeling. How the online card payments industry determines high risk a much broader and shifting process than people actually assume. You may be really surprised to find your business labelled high-risk simply because of its youth, geographic market or high volume of online transactions.

 

High risk merchant accounts are designed in such a way that accommodates businesses that are financially unpredictable, prone to chargebacks or pose a certain degree of potential loss to merchant service providers and banks. When a merchant service provider , also known as a merchant account provider, merchant processor or acquiring bank, partners with a merchant, it serves a few main purposes:

 

  1. Providing credit card processing equipment, software and services that move credit card payment funds from the cardholders’ banks to the merchant’s bank.
  2. Interacting with banks and credit card companies on the merchant’s behalf is crucial because the transaction process entails an authorization and settlement process involving several parties it’s quite a long process.
  3. Signing on as the merchant’s financial guarantor in a way. If the merchant runs into trouble with excessive chargebacks, fraud losses or other setbacks it can’t afford to cover, the MSP is on the hook to repay the lost amounts to banks and credit card companies.

What is chargeback?

A chargeback is a transaction reversal which occurs after a merchant has charged a customer. It’s similar to a refund in that the customer is requesting a return of their funds. However, it’s important to understand the distinction between chargebacks vs refund requests. During a refund request, the customer reaches out to the merchant, explains the issues he’s facing, and asks for their money back. To initiate a chargeback, the customer instead will contacts their bank to file a dispute, who forcibly snatch the funds from the merchant’s account, thereby reversing the payment.

Steps for Avoiding Online Chargebacks?

Follow Payment Processing Protocols:

Each card-processing network has specific protocols for handling card-not-present transactions. It is best to capture customer’s IP address obtain proof of delivery.

Use Recognizable Payment Descriptors:

As the name suggests, transaction descriptors describe a certain type of payment, so they help to identify the transaction on a bank statement. Customers can see descriptors on their bank statements after making any purchase. It also helps customers recognize their purchase and makes it easy to identify the order. It helps to minimize the risk of chargebacks — descriptors which is great because it is difficult to identify that can confuse customers, leading them to initiate a dispute.

Provide Superior Customer Service

One of the greatest ways to define great customer service is to understand that you must go above and beyond your customer expectations during each interaction. To achieve this goal, you must first understand what your customer’s needs, which requires a lot of market research and surveys. You cannot define great customer service without talking about reaching out to your buyers to ensure that they had a pleasant and hassle free experience with your business.

Steps to reduce chargebacks in your high risk merchant account.

If you’ve been operating for any length of time, you know that dealing with chargebacks is one of the most frustrating aspects of running a business. Too many merchants treat chargebacks as an unavoidable cost of doing business. Chargebacks are a costly and unfortunate fact of life for many small businesses that accept credit cards. However, there are ways you can protect yourself against unfair chargebacks

Provide great Post-Sale Customer Service:

This one is easy and intuitive. our credit card processor will likely offer chargeback notifications so you can find out quickly if a customer is disputing a charge. Many chargebacks are due to a customer wanting to cancel a service or return a product. Not all of these can be eliminated due to excellent post-sale customer service. Round-the-clock help and support and opting for a customer-friendly approach can really diminish the risk of clients going straight to their card issuer to resolve problems. The old quote seems right in this case ”The customer is always right”

Mention Contact Information

Inform your clients in advance, make sure they receive your notice of any automated recurring charges. Once client cancels the subscriptions do not make further charges.

Chargeback Alerts:

Chargeback Alerts are simply alerts that a customer has initiated a chargeback against your company. And they provide you with a 48 to 72 hour window in which, should you choose, you can fully refund the customer, and by doing so avoid the chargeback process entirely. It’s an excellent way to keep the customers updated.

Give Clear Data to Clients

Make sure you present your products or services with as much details as possible, with correct pricing and clear terms, and you will avoid chargebacks due to clients stating they have received something else from what was being promised. A large percentage of ‘friendly chargebacks’, that is, chargebacks where the customer legitimately authorized the charge but later disputes it, are caused because customers are attempting to return a product and either don’t know the refund policy, or find it too burdensome to comply with. Ensure that the billing descriptor that shows up on clients’ financial records is also recognizable and correlates to their purchase to avoid uncertainty for the customer. Use your shop name or another term that you have told clients to expect on their statement.

Offer refunds

A small but easily avoidable type of chargeback that particularly afflicts card not present and eCommerce merchants is “credit not issued” chargebacks. Most often, this is because the customer fails to understand that a refund takes 3-7 business days to appear as a positive balance on their credit card statement even when its initiated immediately. Have a friendly refunds policy by allowing clients to ask for their money back for a set period of time and do not complicate when they do so, be fast instead.

Avoid Technical Errors

It’s good not to have technical errors. Even if there is technical errors it’s good to get a quick fix with the technical support team.

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