Top 8 Ways To Prevent and Manage Chargebacks

June 26, 2019 | High Risk Merchant Account | Jessyka Lee

What’s a Chargeback?

A chargeback is the effect of a dispute of a charge by the credit card holder. If the card issuing bank takes the dispute, it will instantly refund the charge to the card holder then file the chargeback via the acquiring system who will then draft the refund from your checking accounts and send you notification of their chargeback. You will then need 3-4 weeks to dispute the chargeback by providing documentation of this sale.

Online merchants are at greater risk of an unsuccessful dispute of a chargeback given the absence of a signed receipt which provides proof of a sale. There are both valid (e.g. duplicate transactions and damaged things ) and invalid (fraudulent) reasons for chargebacks. Merchants should take steps to prevent and minimize chargebacks, irrespective of whether the dispute is valid.


Top 8 Strategies to Manage Chargeback Risk

As stated before, there are various reasons a customer may dispute a fee. How a retailer manages the danger surrounding such disputes will determine whether it results in a chargeback.

Here are 8 common scenarios and approaches to mitigate risk:

01. Customer refunds —

When a client requests and is eligible for refund, make certain to do this fast to avoid a”charge not processed” chargeback. Furthermore, make sure that your refund finance policy is clearly mentioned on every trade, and the customer ought to be asked to click an”I agree” button prior to order is finalized. Only refund to the identical credit card used as using the initial purchase.

02. Implement diagnostic controls for fraudulent charges —

Since the card is not present throughout the trade, online transactions have higher fraud risk. Here are a few methods to reduce this threat:

  • Require the security code on the back of the credit card so as to process payment.
  • Maintain a record of problematic clients and block transactions from these customers.
  • Limit the number of transactions by the exact same customer for a particular time period (e.g. hour, day, week).
  • Maintain good records.
  • Track communicating with clients, and document customer IP addresses.
  • Use an address verification service. This will match the cardholder’s address to the card prior to approving the purchase.

03.Customer service —

When a customer cannot find your information when there is a question or criticism, they can go straight for their credit card company to dispute the charge rather than contacting you first. Make your customer support contact information easy to find.

Make it visible on your website, include it using the shipped merchandise and also have it on all mails. Respond to your customers fast. This may encourage the client to call you together with the dispute before going to their charge card businesses, supply you with the chance to correct the problem, and can also supply for a good reputation for customer service.

04.Recurring transactions —

Recurring transactions are usually employed for subscriptions and are often times automatic. As soon as a customer cancels a subscription, then act immediately stopping the automated payment. This will avoid several chargebacks from the same customer.

05.Product not received —

A fee cannot be processed before products or services are provided. Using a delivery service which offers delivery confirmation will provide evidence of shipping. Here are ways to manage delivery scenarios which aren’t as straight forward:

06.Paying in Installments —

Make certain to disclose all terms of installment in composing and have customer accept those terms by using an”I agree” button. The first installment payment cannot be processed prior to the shipment of products.

07.Expedited delivery —

A payment could be processed prior to shipping when the sale is called”delayed delivery” in the terms nonetheless, you can’t process a deposit before shipping. Again, have the customer click an “I agree” button.


Top 3 Strategies to Respond to Chargebacks

When a chargeback does occur for any reason, follow the steps below to obtain a higher Prospect of successfully disputing the chargeback:

01.Respond into the dispute as soon as you get notification. If you don’t respond within the required interval, you are going to drop the wholesale plus any chargeback penalties.

02.Collect all documentation surrounding the sale, and give it to the credit card business. Including order confirmations, delivery notices, the client’s IP address and some correspondence with the customer.

03.Learn from each chargeback situation and react by setting up systems to protect against a similar occurrence.

Our experienced team has a wealth of experience helping merchants to better understand and mitigate chargebacks. Contact us today with questions regarding this topic or to set up a merchant account.

June 26, 2019 | High Risk Merchant Account | Jessyka Lee

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