Chargeback is a transaction that is being disputed by the cardholder or the issuer. There are numerous reasons why “chargeback can happen”, and the most common are the following: returned merchandise, terminated services, disputes, errors, or fraud.
Usually, chargeback is one of the costly parts of accepting credit cards. However the risk of it can be reduced if the merchant follows some simple but extremely effective steps that will result in the customer’s satisfaction and transaction accuracy.
In the online commerce, the chargeback seems to be one of the most irritating battles that may happen between the merchant and a customer, though these battles happen on a regular basis. Keeping everything simple is the best possible way out of this situation – a well planned offense i.e. a thought out eCommerce website will help you avoid the chargeback conflict.
Chargeback prevention starts with proper descriptions of policies.
Any good relationship is built on clear and successful communication, especially business relationships. By stating your policies and procedures, you will secure yourself lasting relationship with your consumers. It’s much harder to get a new client than to attain a happy one.
Today users have the ability to share their negative experience (which mostly happens due to their inability to understand certain functions) through the social networks, like Twitter, Facebook, Google+ or any other. Negative things usually spread as a play in the overcrowded square. In order to avoid the chargeback, you need to incorporate following steps into your website:
- Display your return/cancellation policy
- Provide detailed product descriptions
- Shipping cost as a chargeback trigger
- Direct customer service
- Billing practices
- IP addresses log
- Get a manual imprint and a signature
- Credit refunds
- Credit card numbers discrepancy
- CVV2 and CVC2 attributes
- Keep the order status up-to-date
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All trustworthy eCommerce businesses have a return policy though quite often it comes out that these policies are business friendly but not customer-friendly. That is why when creating your policy rules make sure you put enough time and thought in it and make easy to find by placing links on all pages of your website. When your customer “checks out” they should be prompted the policy rules before submitting their credit card payment. In addition your confirmation email should contain the cancellation and return policy links.
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This may sound a bit controversial but sales depend much on the info you provide considering a specific product. Make sure that your product descriptions are not over embellished because this will create unrealistic consumer expectation leading to a chargeback. The golden middle is an accurate information with detailed photos. If your product descriptions are well-written your customer will also have a pleasurable experience and will look forward to shop with you again.
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Users’ headache is often caused by the shipping policy. Make sure your rules are transparent enough to be understood from the first reading, provide links to your shipping policy options stating out all charges clearly. These rules will give consumer a know about what to expect during the checkout.
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The Contact Us section is what needs to be included firstly to your home page as well as the phone number. The number will guarantee consumer confidence and lower chargeback complaints. The contact info displayed in the header of the page will make your eCommerce site more inviting but it will allow the customer to easily contact you to handle any issues before they just decide to call the credit card company.
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Make sure your customers understand at which point they will be billed and charged. You need to inform them how the charge will appear on their credit card statement and a contact number if they have any questions. The disclosure needs to be placed at a printable confirmation page and in the confirmation e-mail sent to the user. When this information is provided to the user this will reduce the confusion leading to a chargeback.
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Tracking fraudsters is much easier when you have a log of IPs captured as a security measure. This disclosure will greatly discourage credit card fraud prone criminals from your site and onto one with more relaxed security measures.
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If you are unable to swipe a card through your point-of-sale terminal, you must obtain a manual imprint of the card. This manual sales slip must contain the customer’s signature, transaction date, authorization code, purchase amount and merchant information — failure to obtain a complete copy can result in the following chargebacks:
- fraudulent transaction – no cardholder authorization;
- fraudulent transaction – card present;
- fraudulent transaction – card not present.
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To prevent Credit Not Processed chargebacks, quickly process refunds to your customers. Make sure that your customers are aware of the cancellation or the refund policy in writing. Your refund/cancellation policy should be printed on the transaction receipt as close as possible to the signature line.
- if you are using a website to sell services/merchandise, the refund/cancellation policy should be on your check-out screen with an “I agree” button so that the customer clicks on to complete the transaction;
- if you do not give refunds or offer in-store credit only, this information should be included on the transaction receipt.
Refunds must be made using the same credit card as the original sale. The card purchase must not be refunded by cash or check.
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Make sure that card number and the displayed account number match. Print the full account number on all phone and mail orders. Ask phone customers to read back the card number to ensure accuracy. Non-matching transactions can result in the following chargebacks:
- account number not on file;
- non-matching account number.
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CVV2 and CVC2 attributes will help you avoid the fraudulent orders. This includes the Address Verification Service (AVS), the Card Verification Value 2 (CVV2), the Card Validation Code 2 (CVC2) and the Card Identification (CID).
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Make sure that your customers can see the status of their orders. To make your buyers satisfied provide them up-to-date information together with shipment updates and tracking numbers if appropriate. Tracking numbers will give your buyers updates about their orders when shipping your products with carriers that provide an online tracking service and signature proof of delivery that helps to protect you against claims of non-delivery.
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There is no better way to deal with chargebacks than to avoid them by being extra cautious, offering good and honest service. Because once a chargeback comes, it may lead to a loss of sales, loss of the merchant account, waste of valuable time. Make sure that all stages of the check out process are thoroughly though out and will not be difficult for customers especially for the newcomers.