Ecommerce is like a chargeback minefield. When you present a card for payment, and the swipe machine shows a message, card-not-presented, there arises an opportunity of fraud. It gives birth to too many disputes and a situation of deliberate scam. The merchants and shopkeepers can face the consequences of losing revenue from too many chargebacks. You must know how to minimize the chargeback numbers. This article will prove to be a guide to chargebacks for merchants facing this fraud.
Effective Ways to Stop eCommerce Chargebacks
By following some of the practices, you can make your customers happy, and at the same time, cut the number of chargebacks.
- Customer Service - A poor customer service is one of the reasons for increased chargeback numbers. Answering the customers' queries and making them understand their purchases will help in decreasing the chargeback. An easy refund policy will surely help your business.
- Prevention of Fraud - A chargeback fraud is a problem for both the cardholder and the merchant. As a merchant, you should give attention to defending against chargebacks.
- Representment - Take the matter to representment if you believe that the chargeback is a fraud. It will help you recover some lost revenue. You must be sure that you have the evidence supporting your claim.
The eCommerce merchants are much exposed to the danger of facing chargebacks issues. Let us now discuss some basic preventive measures to overcome online payment chargebacks.
What is an Online Payment Chargeback?
An online payment chargeback is a chargeback for an online transaction. A chargeback takes place when a customer having a card asks the bank to reverse a particular transaction. These are common because they are easy for scammers. It is an alarming call for those unfamiliar with it.
If the cardholder convinces the bank, it will debit the merchant's account and credit the amount to the cardholder's account.
Chargebacks are generally used by those cardholders who feel to be a victim of some fraud, like from a dishonest merchant or stolen credit or debit card.
Fortunately, there are arrays of tools existing to help merchants stop these online payment chargebacks. A merchant also must be aware of the practices to prevent chargebacks fraud.
Practices to Follow by the Merchant to Avoid Chargebacks
1. Following Protocols for Payment Processing
Following SOP and correct protocol help a merchant to weed out fraudulent transactions even before it takes place. Every card processing system has particular protocols to handle transactions showing card-not-present. You can capture data, like proof of delivery, customer's IP address. You can also use CVV verification and AVS.
Ignoring these protocols will automatically rule against you and result in a chargeback dispute.
2. Using a Familiar Merchant Descriptor
It is a common type of friendly fraud. A customer unfamiliar with the statement, showing the transaction, reports to the bank immediately, based on suspicious charges. Even after the customer realizes the transaction statement, it is too late for the merchant to keep himself from the chargeback. Thus, a merchant must ensure an identifiable merchant descriptor to avoid these types of disputes to arise.
3. Satisfactory Customer Service Prevents Chargebacks
A direct conversation on any query and a spot resolution can result in avoiding a chargeback. A satisfactory customer service solves many such problems including, decreased number of chargebacks. An easy refund policy will help you to minimize chargebacks and help to retain your customer base.
4. Using Fraud Prevention Tools
There are wide arrays of fraud-preventing tools available in the market for merchants. You can use any of these tools, depending upon your need and budget. You can also talk to experts in the related field, about which gadget to install according to your requirements. By following expert advice, you can safeguard your interest and prevent chargeback fraud.
Whenever you feel shady about the customer or an order, contact the cardholder in person to confirm that it is him who made the transaction.
5. Maintain Records of Representment
Keeping the records and data of an online order is very necessary. Data, like when the order was placed, invoiced, and delivered, will help you at the time of entering into a legal suit. This is vital data to make your case legitimate if you go for representment.
6. Formulate Easy to Understand Policies
Ensure that the policies you formulate for the online transactions are easily understood by the customers. The policy for placing purchase orders, delivery time, and refunds should be clearly defined to prevent future disputes.
Prevent Chargebacks, Rather Than Contesting Them
Chargebacks are preventable, and you should take preventive measures first before going into a contest. All the above-mentioned steps will help you to prevent and avoid chargeback fraud. Contesting every chargeback fraud will cost you time and money. You will also lose the trust of your customers, eventually losing your customer base.
Do not hesitate in installing the tools to prevent chargebacks. A customer is at one end, and the merchant is at the other end of every chargeback. The merchant must identify the root cause of the problem. Always remember that you should only promise things that you can deliver.
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