Chargeback is a kind of dispute or an activity that is done by the customer after making any purchase through a credit card. Here, the customers get payments back on their card, plus you have to pay a chargeback fee. It all relies on the rules of banks, if rules are against you and customers have valid points, then their payment will get reversed. And if rules are in your favor then the money stays with you.
For the protection of chargebacks, there is an act called Fair Credit Billing Act(FCBA) created in 1974. This act gives guidelines to customers to avoid frauds, like incorrect and unfair billing practices. Some individual credit card companies set some rules and procedures to investigate fraud to check whether the consumer is right or false.
Chargeback rates differ by billing models, industry, and transaction amount.
Here are 6 ways to prevent chargebacks in 2021:
1. Use several-layered payment protocols
In a recent report of chargebacks, it is found that visa fraud disputes increased by 5% and Mastercard frauds jumped to 9%. The main reason behind this is CNP(Card Not Present) transaction, which is common in online payments.
Such an increase in fraud raises the need for prevention, and in a survey, it is discovered that 90% of businesses use some methodologies to remain safe from frauds.
Prevent problems at the checkout by:
- Sending Email verifications
- Asking card security codes such as CVV
- Giving Chargeback prevention alert
- Phone number reverse lookups
- Order validation tools
- Shipping and billing address confirmation
- System fingerprinting
2. Make your return and dispute simple and easy
Every customer files chargebacks through the credit card company because it’s simple. By making a process of the get-go, you can show customers that it’s easy and reliable to contact you first.
Improve you return procedure by-
- Asking for review
- Adding FAQ page
- Providing free return
- Automating your return procedure
- Following up after purchase
3. Analyze your chargeback figures
In business, it’s essential to assess, collect and act on the data for the prevention of chargebacks. Your point of sale(POS) system plays a crucial role here, which must be integrated with your payment solutions.
To find in-depth knowledge about your transactions data, explore POS reports and identify frauds done by customers and employees. For instance, use reliable POS software, which provides advanced features like fraud prevention and monitoring tools.
4. Set up a transparent shipping and billing address
A complaint which is common among all customers is that they didn’t receive the purchased item. In some cases, it’s true, and in others, the product is still in the shipping process.
Elucidate your process by-
- Updating customers about delays: drop a message on their contact or post on your site about the delay of product.
- Offering better shipment options: Provide package tracking link to them by which they can check their delivery status and its date of delivery.
- Using relevant drop shippers: If you are shipping products from outsiders then choose them wisely according to their reputation and relevance.
- Alerting customers on out-of-stock purchases: If an item is out of stock then give them a link to register about the notification of the item getting back in stock.
- Changing your payment descriptors: Go deep down in the POS feature and figure out how to include more information about your company on payment receipts.
5. Stay updated with new chargeback codes
Chargeback reason codes do not always remain the same. Every card network has their arrangement of chargeback reason codes to show the explanation of customer debate when they ask for a chargeback.
Merchants must be updated with a new chargeback reason code, so they can give valid answers when something is wrong. By staying up to date with chargeback reason codes, you can understand why customers are mentioning chargebacks, and then it will become easy for you to prepare a correct answer, which later helps you in debate with purchasers.
6. Manage customer’s expectation
It’s important to offer responsive customer service because their expectation about delivery and conveyance is too high.
Each image and description you choose must reflect the actual product. If there is anything wrong then you have to face the risk of getting chargebacks for items not as described. And list the policies of your website on each page and keep them updated with the change in product details and shipping times.