Chargebacks were invented to build trust in online shopping and to prevent unauthorised transactions. Customers can reverse a charge if they are unhappy with the product or service or suspect fraud on their account. Chargebacks carry a cost for the merchant, but they have much broader implications because they affect the merchant’s ratings with their issuing bank. The best medicine to combat chargebacks and chargeback fraud is prevention.
Before you can fight fraud or chargebacks, you need to know the root cause of it. Once you’ve identified the cause, you can focus on those areas of your business. There are various companies and software organisations that provide chargeback management services. You can look at this blog to see which ones might suit your needs and what to look out for when you choose one.
Here are three ways you can combat chargebacks and chargeback fraud yourself.
Stick to payment processing protocols
Every card network has particular protocols for handling card-not-present transactions. They might require that merchants capture client IP addresses, use CVV verification or obtain proof of delivery of products. Stick to the protocols your card network requires. It will help you syphon out fraudulent transactions before they even occur. If you don’t, the card network might automatically rule against you when a dispute arises.
What’s in a name?
Quite a lot, it seems. Clients are understandably paranoid about online fraud. The ability to pay seamlessly via any device or merely tapping a card on a POS device opens up the possibility of unwanted transactions. In this context, you can make life easier by ensuring that your merchant descriptor is identifiable on customers’ statements. If you run various businesses, use the same name on your storefront as the one appearing on statements when people buy from you. Most importantly, provide a contact number that works where people can get hold of you to clarify anything unclear.
Speaking of customer service…
Prevent chargebacks with excellent customer service
Some of the most important things in life are invisible. Like air. You really know when you don’t have it. Customer service is like that. A great customer service team and systems can save you hundreds of thousands of pounds. It’s extremely successful as a customer retention strategy. In a world filled with parity products, it will often be the difference between bubblegum companies that only stick around for a season or successful ones that your children’s children will know.
Make it easy for people to contact you and make every effort to solve their problems or answer their complaints. If you do that well, there will be no need for chargebacks. Even if you have to do a refund, it will cost you less than a chargeback would.
Let’s look at an example that illustrates the point. How many people subscribe to services or apps that they end up not using? At the end of the month, they tell themselves they must cancel it. Only to forget until next month’s end — ditto for trial memberships that turn into paid packages once the trial expires. As if a lightning bolt struck them, they wake up one day in a panic and try to get months’ worth of refunds back, all at once.
Make it easy for people to unsubscribe and be generous when you refund customers that cancel their subscriptions. It will cost you much less than a chargeback. Chargebacks are on the increase year-on-year and accounts for 0,47% of total merchant revenue. What’s more, once subscribers know they can easily contact you for a refund, you should start seeing a drop in chargebacks.
While we’re on exceptional customer service, did you know that Truevo uses a combination of AI and people to take care of our customers? Listen to what David Liu, Truevo’s CEO, says about it in an interview with the BBC. We’ve also written many blogs on the topic that you can read at your leisure here.