We’re here to tell you that, yes, chargebacks happen. But, you shouldn’t be letting chargebacks impact your business. You have enough threats to your business success and this one, chargebacks, you can control. The key to preventing chargebacks lies with knowledge.
The more you know about chargebacks, the chargeback process, the systems available to help prevent and solve chargebacks, and how you can take measures to reduce your chargeback ratio – all the better. Now, we don’t want you to get overwhelmed with thinking about chargebacks and all there is to learn. This is why we’re here. The Verifi team is your chargeback resource.
In fact, we want you to use our website as your go-to resource for learning about chargebacks, payment gateways, merchant issues, and if you can’t find what you’re looking for in our FAQ, contact us. So let’s get to it and dig into chargebacks and get you equipped and prepared to focus on your bottom line and spend less time and energy worrying about chargebacks.
What is a Chargeback?
Chargebacks were introduced to protect credit card consumers from fraud. With chargeback protection, your customers have the freedom to dispute any charge to their credit and debit cards. The scenario under which a chargeback claim is valid, for example, is when a customer discovers their credit card details have been compromised and charges were made to their card without their consent.
But today, many years since the introduction of the consumer protection mechanism in 1974, the nature of buying and selling has changed drastically. Unfortunately, the chargeback system has not kept up with these changes. With the ease of mobile technology, ecommerce, the Internet, pay-as-you-go, digital gift cards, virtual debit card payments – consumers have become savvier and have learned how to cheat or beat the system. In other words, often making fraudulent chargeback claims to benefit from a broken and time-consuming chargeback process.
What we want you to understand is that yes, chargebacks are costly but they shouldn’t be an accepted cost of doing business. By working with experts in preventing chargebacks you can spend less time worrying about (and paying for) chargebacks and focus on running your business.
Why do Chargebacks Happen?
The major underlying reason for a chargeback is simply that the customer does not recognize the information on their bank statement. This can be anything from simply forgetting about making the purchase or to poor identification of a merchant billing descriptor on the bank statement.
The four main reasons that customers file a chargeback are:
- Customer Did Not Receive the Item: This is one of the most common chargeback reasons. Simply, the customer did not receive the item but was still charged for the order. This can happen when a delivery is made without requiring a signature, the customer entered incorrect address details, the item was left at the front door and was stolen, or the customer may have in fact received the item but is claiming otherwise.
- Fraudulent Credit Card Use: This happens more than we realize. Somehow the customer’s credit card details were stolen and fraudulent transactions were made on this card. Often the card issuing bank discovers these charges before the customer.
- Return Not Processed: When a customer returns a product but the charge was not refunded on their credit card, the customer will file a chargeback. This is a common occurrence typically due to miscommunication between customer service, billing, and sales departments.
- Technical Issues: With ecommerce, phone orders, email transactions, or mobile payments, there will be errors in processing, charging, and authorizing customer credit cards. Technical issues can result in the customer being charged twice or a repeat transaction being made without authorization.
In these chargeback instances, you, the merchant are responsible for the charges. Not only do you have to refund the customer but you’ll also be subjected to fees by the issuing bank and your bank. This is where and how the costs of chargebacks can add up, making it important that you do what you can to prevent chargebacks.
What Can I do to Prevent Chargebacks?
Preventing chargebacks often comes down to clear communication with your customers.
- Be Clear and Obvious: Make it easy for your customers to find information about your company on your website. This includes your contact information and customer service details.
- Simple Billing: Too often, merchants use a different name on their bank statement. This confuses customers who are used to dealing with one company name but see another company name on their bank statement. This results in customer confusion and can result in a chargeback.
- Confusion Over Return Policies: Make this information very obvious and accessible on your website. In fact, it helps to have a check box that a customer must select that confirms they are aware of the return policy. This way you are putting some onus on the customer.
- Confirm Everything: Make sure that your payment, authorization, and authentication system has built-in mechanism to verify and confirm all the customer information. Give the customer the opportunity to review their order, double-check the details, etc. It can help to send a conformation email for orders and in this email, clearly state how a customer can make changes to their order.
As you can understand, this all comes down to good customer service. The easier it is for your customers to contact you when they have a question or concern over an order, the better they’ll feel about their purchase. They’ll also be less quickly to overreact and file a chargeback and will contact you and your team first.
Learn More About Chargebacks
We are your chargeback resource. Take advantage of the FAQ section and do contact us with any of your questions about chargebacks. The entire Verifi team is here to help you out and make sure that you can focus on running your business without having to worry about chargebacks.