Technological advancement has revolutionized how customers pay for goods and services. Gone are the days when you were supposed to be physically there to make your payments. Recently, customers can easily pay for goods and services regardless of their physical location.
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Although online payment using cards has simplified the payment process, you might encounter issues as a business owner. Some of the issues include chargebacks. Dealing with and solving chargeback is part and parcel of managing an online enterprise which is accepting card payments. For this reason, it’s important to ensure you understand how to manage chargebacks and improve your profit margin.
This article discusses what you need to know about chargeback management, what chargeback is, ways you can use to prevent the issue, and more. Keep reading.
What Is Chargeback?
In simple terms, a chargeback is a payment refund claimed officially by a cardholder from their issuing bank. To initiate the refund process, the cardholder should contact their bank and dispute a charge on their account. The funds will be taken from your account if the issuing bank approves the dispute. The major aim of a chargeback is to refund a cardholder who has been a victim of fraud. However, it’s important to understand that, in some cases, a fraudster may file a dispute without the cardholder knowing.
Chargeback management, on the other hand, refers to the strategy you deploy to recover revenue lost to chargeback, reducing its impact on business operations. The strategy will also help you analyze your chargeback data to prevent future occurrences. Incorporating chargeback management system from a reputable vendor will help improve the security of your transactions, chances of returning customers, and overall customer satisfaction.
How To Prevent And Win Chargeback?
You can use the following to prevent chargebacks, saving you lots of money and bucks in the long run. They include:
1. Make Clear Policies
This is one of the ways you can utilize to prevent and reduce chargebacks. As a business owner, clearly outline your refunds and order fulfillment policies. First, ensure your policies that protect and secure customer transactions are displayed on your website. Outlining the policies on your site may discourage people from making fraudulent transactions, reducing chargebacks.
Additionally, it’s crucial to provide order fulfillment information. The customer can use the provided information to understand your order processing timeframe and summary. If a customer files a chargeback, you can refer to this information to win the dispute. Also, it’s crucial to encourage your customers to keep a copy of the transaction history. Thus, it’ll be easier to compare the details on your record with their copy and determine the legitimacy of their dispute.
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2. Use A Recognizable Merchant Descriptor
There are several reasons why a customer might file a chargeback. One of the reasons is when a customer doesn’t recognize a charge on their transaction statement and immediately reports to the issuing bank. In some cases, the customer might realize the transaction is connected to their purchases, but it might be too late to rectify the dispute, and you may waste too much time and money.
To prevent this, ensure you use a recognizable merchant descriptor. If you conduct business under more than one name, ensure the merchant descriptor matches the name of your online store. It’s also advisable to include a working contact (phone number or email) to guarantee the customers reach out to you before contacting their banks.
3. Provide Relevant Product Descriptions
This is another way you can use to prevent and win chargebacks. Providing an incomplete or incorrect product description may increase the chance of a chargeback dispute. The customer may receive the wrong product, forcing them to file a chargeback. As mentioned above, a chargeback is time-consuming and expensive, which might affect your production line. Hence, it’s important to provide relevant product descriptions, guarantee that the customers will receive the correct information, and improve customer satisfaction.
4. Utilize Automatic Fraud Screening
Detecting fraud can go a long way in preventing chargebacks. Thanks to technological advancement, you can easily employ advanced tools to detect, manage, and assess fraud risk. The tools will help you identify and flag fraudulent transactions, helping prevent and win chargebacks.
There are several ways you can set up a fraud screening system. You can set up the systems yourself or reach out to a reputable service provider in your locality. However, it’s important to identify a system’s return on investment(ROI) to give you the value of your hard-earned bucks.
The chargeback process is time-consuming and expensive. For this reason, it’s important to ensure you utilize several strategies to prevent and reduce the occurrence of this issue. This article discussed some of the ways to prevent and win chargebacks. You can also conduct extensive research to identify the ideal strategy for your business.